Registered Education Savings Plans ("RESPs") are tax-assisted vehicles designed to help families save for their children's post-secondary education. An RESP may be an individual plan or a family plan. Family plans provide greater flexibility for families with more than one child because the assets of the plan can be allocated among siblings, subject to certain restrictions.
When separate individual plans have been established for siblings, the Budget proposes to allow transfers between individual RESPs, without tax penalties and without triggering the repayment of the Canada Education Savings Grants ("CESGs") that are paid by the Federal Government, provided that the beneficiary of a plan receiving a transfer of assets had not attained 21 years of age when the plan was opened. This measure provides subscribers of separate individual plans with the same flexibility to allocate assets among siblings as exists for subscribers of family plans. The proposal is especially helpful when RESP subscribers are individuals who are not the parents or grandparents of the beneficiaries, as they can subscribe only for individual plans. These measures will apply to asset transfers that occur after 2010.