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Canada Education Savings Act (S.C. 2004, c. 26)

Assented to 2004-12-15

Canada Education Savings Act

S.C. 2004, c. 26

Assented to 2004-12-15

An Act to provide financial assistance for post-secondary education savings

SUMMARY

This enactment is intended to encourage the financing of post-secondary education through savings in registered education savings plans. It provides for the payment of Canada Education Savings grants in relation to contributions made to those plans. The amount of the grant is increased for children of lower- and middle-income families. It also provides for the payment of Canada Learning Bonds in respect of children of families receiving the National Child Benefit Supplement.

Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

SHORT TITLE

Marginal note:Short title

 This Act may be cited as the Canada Education Savings Act.

INTERPRETATION

Marginal note:Definitions
  •  (1) The definitions in this subsection apply in this Act.

    “Canada Learning Bond”

    « bon d’études »

    “Canada Learning Bond” means the bond payable or paid under section 6.

    “CES grant”

    « subvention pour l’épargne-études »

    “CES grant” means a Canada Education Savings grant payable or paid under section 5 or under Part III.1 of the Department of Human Resources Development Act, as it read immediately before the coming into force of section 19 of this Act.

    “child tax benefit”

    « prestation fiscale pour enfants »

    “child tax benefit” means a deemed overpayment under Subdivision a.1 of Division E of Part I of the Income Tax Act.

    “national child benefit supplement”

    « supplément de la prestation nationale pour enfants »

    “national child benefit supplement” means that portion of a child tax benefit determined under the description of C in subsection 122.61(1) of the Income Tax Act.

    “prescribed”

    Version anglaise seulement

    “prescribed” means prescribed by regulations.

    “primary caregiver”

    « responsable »

    “primary caregiver” means

    • (a) in the case of a beneficiary who is a qualified dependant in respect of whom a child tax benefit is payable, the eligible individual in respect of the beneficiary; and

    • (b) in the case of a beneficiary in respect of whom a special allowance is payable under the Children’s Special Allowances Act, the department, agency or institution that maintains the beneficiary.

  • Marginal note:Income Tax Act expressions

    (2) Unless a contrary intention appears, in this Act

    • (a) the expressions “adjusted income”, “eligible individual” and “qualified dependant” have the meanings assigned by section 122.6 of the Income Tax Act;

    • (b) the expressions “beneficiary”, “con­tribution”, “promoter”, “registered education savings plan”, “subscriber” and “trust” have the meanings assigned by section 146.1 of the Income Tax Act; and

    • (c) any other expression has the meaning assigned by the Income Tax Act.

PURPOSE

Marginal note:Purpose

 The purpose of this Act is to encourage the financing of children’s post-secondary education through savings, from early childhood, in registered education savings plans.

Marginal note:Informational and promotional activities

 The Minister shall take measures necessary to carry out the purpose set out in section 3, including making known to Canadians, through informational and promotional activities, the existence of CES grants and Canada Learning Bonds and any terms and conditions.

DESIGNATION OF MINISTER

Marginal note:Power of Governor in Council

 The Governor in Council may designate a member of the Queen’s Privy Council for Canada to be the Minister for the purposes of this Act.

PAYMENTS

Marginal note:CES grants
  •  (1) Subject to this Act and the regulations, on application to the Minister in a form and manner approved by the Minister, the Minister may, in respect of any contribution made in 1998 or a subsequent year to a registered education savings plan by or on behalf of a subscriber under the plan in respect of a beneficiary under the plan who is less than 17 years of age at the end of the year preceding the contribution, pay to a trustee of a trust governed by the plan a CES grant for the benefit of the trust. The payment is to be made on any terms and conditions that the Minister may specify by agreement between the Minister and the trustee.

  • Marginal note:Amount of grant

    (2) The amount of a CES grant that may be paid for a particular year at any time is equal to the lesser of

    • (a) 20% of the contribution, and

    • (b) the amount, if any, by which the lesser of

      • (i) $800, and

      • (ii) the beneficiary’s unused CES grant room for the particular year at that time

      exceeds

      • (iii) the total of all CES grants paid before that time — other than those amounts paid under subsection (4) — in respect of contributions made in the particular year in respect of the beneficiary.

  • Marginal note:Unused CES grant room

    (3) The unused CES grant room for a beneficiary for a particular year at any time is

    • (a) if the beneficiary was 17 years of age or older at the end of the preceding year, nil; or

    • (b) in any other case, determined by the formula

      $400 (A - B - C) - D

      where

      A 
      is
      • (i) if the beneficiary was born before 1998, the amount, if any, by which

        • (A) the beneficiary’s age in whole years at the end of the particular year

        exceeds

        • (B) the beneficiary’s age in whole years at the end of 1997, and

      • (ii) in any other case, one plus the beneficiary’s age in whole years at the end of the particular year,

      B 
      is the number of preceding years throughout which the beneficiary was an ineligible beneficiary in accordance with the regulations,
      C 
      is the number of preceding years beginning after 1997,
      • (i) not included in the value of B in respect of the beneficiary for the particular year, and

      • (ii) throughout which the beneficiary was not resident in Canada, and

      D 
      is the total of all CES grants paid before that time — other than those amounts paid under subsection (4) — in respect of contributions made in a preceding year in respect of the beneficiary.
  • Marginal note:Additional amount of grant

    (4) The amount of a CES grant that may be paid for a particular year at any time is increased by the lesser of

    • (a) the amount that is

      • (i) 20% of the contribution, if the beneficiary

        • (A) is a qualified dependant of an eligible individual whose adjusted income used to determine the amount of a child tax benefit in respect of January in the particular year is $35,000 or less, or

        • (B) is a person in respect of whom a special allowance under the Children’s Special Allowances Act is payable for at least one month in the particular year, and

      • (ii) 10% of the contribution, if the beneficiary is a qualified dependant of an eligible individual whose adjusted income used to determine the amount of a child tax benefit in respect of January in the particular year is more than $35,000 but not more than $70,000, and

    • (b) the amount by which

      • (i) $100, in the case of a beneficiary referred to in subparagraph (a)(i), or

      • (ii) $50, in the case of a beneficiary referred to in subparagraph (a)(ii)

      exceeds

      • (iii) the total of all amounts paid under this subsection before that time in respect of contributions made in the particular year in respect of the beneficiary.

  • Marginal note:No determination for January

    (5) If there has been no determination of eligibility for a child tax benefit in respect of January in a particular year, the adjusted income to be used for the purposes of subsection (4) is the adjusted income used to determine the amount of a child tax benefit for the first month in the particular year in respect of which eligibility has been established.

  • Marginal note:Beneficiary born in December

    (6) In applying subsection (5) in respect of a beneficiary born in December, the reference to “the first month in the particular year in respect of which eligibility has been established” in that subsection is to be read as a reference to “January of the next year”.

  • Marginal note:Designation

    (7) The amount referred to in subsection (4) is to be paid to the trustee of a trust designated, in the form and manner approved by the Minister, by the primary caregiver of the beneficiary at the time the contribution is made.

  • Marginal note:Indexing

    (8) The amounts $35,000 and $70,000 referred to in subsection (4) are to be adjusted for each year that is after 2004 in the manner set out in section 117.1 of the Income Tax Act.

  • Marginal note:Restriction

    (9) Subsection (4) applies only to contributions made in 2005 or a subsequent year.

  • Marginal note:Lifetime cap

    (10) Not more than $7,200 in CES grants may be paid in respect of a beneficiary during their lifetime.

Marginal note:Canada Learning Bonds
  •  (1) Subject to this Act and the regulations, on application to the Minister, in the form and manner approved by the Minister, the Minister may, in respect of a beneficiary under a registered education savings plan who was born after 2003 and is less than 21 years of age at the time of the application, pay to a trustee of a trust governed by the plan a Canada Learning Bond for the benefit of the trust. The bond is to be paid on any terms and conditions that the Minister may specify by agreement between the Minister and the trustee.

  • Marginal note:Amount of bond

    (2) The amount of a Canada Learning Bond is equal to the sum of the following amounts:

    • (a) $500 in respect of the first benefit year in which the beneficiary

      • (i) is a person less than 15 years of age at the beginning of the month immediately before the benefit year, or

      • (ii) is born during the benefit year or during the month immediately before it,

      and in respect of whom a national child benefit supplement, or a special allowance under the Children’s Special Allowances Act, is payable for at least one month in that year, and

    • (b) $100 in respect of any subsequent benefit year in which the beneficiary is a person less than 15 years of age at the beginning of the month immediately before the benefit year and in respect of whom a supplement or an allowance referred to in paragraph (a) is payable for at least one month in that year.

  • Marginal note:Meaning of “benefit year”

    (3) In this section, “benefit year” means the period that starts on July 1 in one year and ends on June 30 of the next year.

  • Marginal note:Designation

    (4) The amount of a bond in respect of a benefit year is to be paid to the trustee of a trust designated, in the form and manner approved by the Minister, by the primary caregiver of the beneficiary or, if the beneficiary is 18 years of age or more, by the beneficiary.

  • Marginal note:Additional payment

    (5) When the Minister pays the amount under paragraph (2)(a), the Minister may, in prescribed circumstances, pay into the trust an additional amount determined in accordance with the regulations in recognition of the cost of administering registered education savings plans.

 
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