RESP Grant Repayment Rules: Triggers, Amounts, and Exceptions

RESP grant repayment rules require your financial institution to send Canada Education Savings Grant, Canada Learning Bond, and provincial incentive money back to the government whenever the funds can no longer be used for a beneficiary’s post-secondary education.¹ That covers closing the plan, pulling your own contributions out when no student qualifies for an Educational Assistance Payment, letting the plan hit its 35-year limit, and certain beneficiary changes. How much goes back depends on which event triggered it.

Events That Force Grant Repayment

The grants were deposited on the condition that someone would use the account for school. When that condition breaks, the money leaves the plan. The triggering events are:

Withdrawing your personal contributions for non-educational reasons when no beneficiary is eligible for an Educational Assistance Payment. This is the most common trigger.
Closing the RESP. Every dollar of federal and provincial grant money sitting in the account at that moment is returned.¹
Reaching the plan’s 35-year maximum lifespan with grant money still inside.¹
Changing the beneficiary to someone who is not a sibling of the original beneficiary. The full grant balance is repaid.¹
Transferring to a sibling who is older than 20 at the time of the transfer.²
All named beneficiaries dying while grants remain in the plan.

How Much Has to Be Repaid

Partial Withdrawals of Your Contributions

When you pull some of your own contributions out and no beneficiary qualifies for an Educational Assistance Payment, the promoter applies a proportional formula rather than a flat rate. The current grant balance is divided by the total assisted contributions in the plan, and that ratio is multiplied by the amount you withdrew.³ The result can never exceed the grant balance actually in the account.

For a plan that only ever received the basic 20% CESG match, that formula often works out to roughly 20 cents of grant repayment per dollar withdrawn. The number climbs when the plan also received the Additional CESG, because the extra match raises the grant-to-contribution ratio. Both the Basic and Additional CESG come back together in whatever proportion they occupy in the account.

Full Termination

When the plan is being wound down entirely, whether by your choice or because the 35-year clock ran out, the full CESG and CLB balance in the account must be repaid. A separate formula in the regulation handles cases where provincial grants are also present, so each level of government gets back its own share proportionally.³ The promoter runs the calculation internally.

The $4,000 Over-Contribution Carve-Out

Withdrawing contributions to fix an over-contribution does not trigger CESG repayment, provided the total excess is $4,000 or less at the time of the withdrawal.⁴ The same shelter applies when a beneficiary is already eligible for an Educational Assistance Payment. Outside those two situations, taking contributions out means losing a proportional share of the grants.

Canada Learning Bond: Stricter Rules

The CLB is tied to one specific beneficiary and cannot be shared, even among siblings in the same family plan.⁵ Close the plan before that beneficiary uses the money for school and the entire CLB goes back.¹ You can transfer the CLB to another RESP only when the receiving plan is for the same beneficiary. Moving it toward a sibling triggers repayment.

Provincial Grants Work Differently

Provincial incentives carry their own repayment conditions, and they don’t always behave the way subscribers expect. The British Columbia Training and Education Savings Grant, for example, stays in the RESP even if your family leaves British Columbia after receiving it.⁶ It still must be repaid, though, if you close the plan or make a transfer that doesn’t meet the eligibility conditions, such as moving to a promoter that doesn’t offer the BCTESG.⁷

The Saskatchewan Advantage Grant for Education Savings has its own repayment framework, and the province has amended its regulations in recent years. Provincial programs can change independently of the federal rules, so confirm the current terms with your promoter before transferring or withdrawing when any provincial grant is in the plan.

Situations That Can Prevent or Soften Repayment

A handful of narrow exceptions exist:

If a beneficiary has a severe and prolonged mental impairment that prevents post-secondary study, the CRA may waive certain conditions. Your promoter must submit a written request to the CRA’s Registered Plans Directorate; it is not automatic.²
A rollover to a Registered Disability Savings Plan is available when the beneficiary qualifies for the Disability Tax Credit, but this shelters only the investment growth. The CESG and CLB still have to be repaid at the time of the rollover.²
Fixing an over-contribution of $4,000 or less does not cost you any grants.⁴

For most families whose child simply chooses not to attend post-secondary, none of these apply and the grants return in full.

How the Repayment Actually Happens

You don’t write a cheque. When a triggering event occurs, your promoter calculates the amount, debits it directly from the plan’s assets, and sends it to the federal government before any remaining funds are released to you.³ The promoter then reports the transaction to Employment and Social Development Canada, which updates the federal record of each beneficiary’s remaining grant entitlements.⁶

Any repayment required under the Canada Education Savings Act that goes unpaid becomes a debt to the Crown and can be collected through the Federal Court.⁸ To confirm the repayment went through, look on your account statements for line items identified as grant repayments.

1
Government of Canada. Managing the Registered Education Savings Plan, Taxes and Transfers
2
Canada Revenue Agency. Registered Education Savings Plans Payments, Transferring and Rolling Over Property
3
Justice Laws Website. Canada Education Savings Regulations – Section 11 Repayments
4
Employment and Social Development Canada. Information Capsule 15 – Overcontributions and Contribution Withdrawals
5
Justice Laws Website. Canada Education Savings Regulations – Full Text
6
Employment and Social Development Canada. Registered Education Savings Plan Provider User Guide
7
Employment and Social Development Canada. British Columbia Training and Education Savings Grant Notice
8
Justice Laws Website. Canada Education Savings Act – Full Text