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Quebec will get its share of the grant repayments to the RESP

by

Alain Thériault

25 July 2019 09:30

Photo : Freepik

In the school year, Québec will harmonize its refundable tax credit called Incentive the quebec education savings (QESI) with the canadian education savings, says a bulletin of the ministry of Finance of Quebec. The repayment of the incentive in the event of termination of registered education savings plans (RESPS) could in effect escape the hands of Ottawa.

Revenue Canada and the provinces can claim the financial assistance given to parents to encourage contributions in the RESP. This occurs at the termination of an RESP, the revocation of its registration or of an unauthorized transfer of the assets it holds. In the case where the funds from the RESP are insufficient, it is the repayment of the canada education savings Grant (CESG) that was to this day a priority, leaving for account of the incentive provincial.

All on the same foot

Ottawa remedy the breach in its new regulation by introducing a proportionality rule, which will harmonise the tax authority of quebec. “In the where a refund is needed and that the funds are insufficient to repay all of the sum, the incentives for education savings and federal and provincial government are repaid proportionally in a loss of value of the investments of the plan,” says Finance Québec in its bulletin.

To ensure to recover the incentive refundable, Quebec is equipped with the same tools as the federal government, through the introduction of special taxes, in this regard in the tax Law.

The new proportionality rule leads to other changes based on the fairness between federal and provincial incentives, among other formulas for the breakdown of the educational assistance payments (EAP). And the formulas that allow to disaggregate the share of each government grant under the educational assistance payments from RESPS are changed in the federal regulations. Québec amends its tax law as a result.

Up to $ 3,600

The Incentive québécois equivalent for a given year to 10 % of the first $ 2,500 of contributions made into an RESP during a year for the benefit of a child under the age of 18 years, or an annual maximum of $ 250. For a family of low-and middle-income, this annual limit may be 300 $, due to rate increases that are about $ 500 the first dollars of contributions made in the year. The tax credit is paid directly to the RESP by the trustee. The QESI can reach 3 to $ 600 during the life of the RESP, which is half of the maximum under the federal grant.

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