Correcting RESP administrative errors

This page provides guidance on the kinds of administrative errors that RESP promoters are able to correct and offers some tips and best practices to help avoid error correction requests.

According to the Canada Revenue Agency Registered Plans Directorate (CRA RPD), an administrative error occurs when a subscriber’s instructions aren’t accurately reflected in the transaction records submitted by the promoter to the Canada Education Savings Program (CESP) system.

Corrections permitted by CRA RPD

CRA RPD permits corrections where a processing error has been made that doesn’t reflect the subscriber’s instructions. Some examples of administrative errors would be:

  • Incorrect amount of contribution reported (keying error)
    • Example: should have been $100 but Mackenzie reported as $1,000
  • Contributions not apportioned or reported for each beneficiary according to the subscriber’s directions
    • Example: subscribers directed that $1,200 of contributions be split equally between beneficiaries but reported by Mackenzie for one beneficiary only
  • Incorrect amount reported for post-secondary education payment (PSE) or educational assistance payment (EAP)
    • Example: subscriber requested $5,000 EAP and $10,000 PSE but transactions reported by Mackenzie as $10,000 EAP and $5,000 PSE
  • Incorrect type of payment reported
    • Example: subscriber requested $5,000 EAP but transaction processed and reported by Mackenzie as PSE

The types of errors noted above can be corrected with the approval of the CRA RPD. Additional supporting documents may be required to show proof of intent, such as:

  • withdrawal forms
  • written/electronic directive on allocation of contributions in a family plan
  • written/electronic communication between the subscriber and Mackenzie regarding the error

Corrections not permitted by CRA RPD

CRA RPD does not consider the following to be administrative errors and will not permit error corrections:

  • investment decisions
  • retroactive tax planning (changing past events in order to avoid tax for a given year)
  • lack of oversight or direction on the part of the subscriber

Best practices

Here are some tips that can help to avoid error correction requests.

Contributions

  • Submit standing instructions for Family RESPs to allocate contributions between beneficiaries


Withdrawals

  • Ensure the RESP withdrawal form is accurate and complete, with full investment instructions, before submitting it to Mackenzie. Use the checklist included in the form to make sure all sections have been completed.
  • If beneficiaries have RESPs at other financial institutions, remind them to track Canada Education Savings Grant (CESG) received in previous EAP withdrawals at those institutions. If they exceed the $7,200 CESG maximum in EAP withdrawals, they’ll have to repay the excess directly to ESDC.
  • Be mindful of EAP limits when clients are making withdrawals
    • Full time studies - $5,000 EAP for first 13 weeks
    • Part time studies - $2,500 EAP every 13 weeks

Timeline for correcting administrative errors

All requests are reviewed on a case-by-case basis to determine if a valid administrative error has occurred. Some transaction corrections can be done with Mackenzie approval, while others require CRA RPD approval.

Requests that require CRA RPD pre-approval are submitted through Mackenzie Investments. Generally speaking, CRA RPD response time is about 60 calendar days from the time they receive the request.

Withdrawals
  • Before the end of the calendar year does not require CRA RPD pre-approval
  • Requests after the end of the tax year require CRA RPD pre-approval.

Excess contributions for a beneficiary
  • Six months or less from initial transaction and no contributions six months or more from initial transactions does not require CRA RPD pre-approval.
  • More than six months from initial transaction requires CRA RPD pre-approval and subscribers will need to file a T1E-OVP return (available in the Forms & Publications section of the CRA website)

Excess contributions for a beneficiary in a family plan due to allocation error
  • 12 months or less from initial transaction does not require CRA RPD pre-approval
  • More than 12 months from initial transaction requires CRA RPD pre-approval

Allocation error with no impact on the contribution limit
  • 24 months or less from initial transaction does not require CRA RPD pre-approval
  • More than 24 months from initial transaction requires CRA RPD pre-approval

Our Client Relations team is here to help if you have questions or need assistance to correct an administrative error that doesn’t accurately reflect the subscriber’s instructions. Please contact us at 1-800-387-0614.