C.S.T. Consultants Inc.Exclusive Distributor of The Canadian Scholarship Trust Plan Sales Excellence thru Leadership and Learning
SELL Program Goals • Provide an overview of RESPs and the CESG • Define the C.S.T. Organization • Assist in understanding the RESP industry • Develop knowledge of the Canadian Scholarship Trust Plans • Identify and define New Business Practices
SELL Program Goals • Provide information regarding marketing programs • Increase knowledge of the competition • Develop sales skills • Provide an overview of SalesTree • Increase personal productivity
Agenda Module 1 General Knowledge RESPs CESG Module 2 The CST Organization The RESP Industry
Agenda Module 3 The Canadian Scholarship Trust Plans Prospectus Fees and Deductions Module 4 New Business Information
Agenda Module 5 Change Requests Module 6 Marketing Programs Module 7 Your Competitive Advantage
Agenda Module 8 Sales Skills Effective Calls Presentations Module 9 SalesTree
Agenda Module 10 Personal Productivity Goal Setting Time Management
Module 1 GENERAL KNOWLEDGE
Objectives: • Develop knowledge of RESPs and the CESG.
Module 1 RESPs
What is an RESP? • A Registered Education Savings Plan is a contractbetween an individual (the subscriber) and an organization (the promoter, Canadian Scholarship Trust Foundation).
What is an RESP? • The subscriber makes contributions to the RESP, which earns income. • The subscriber names one or more beneficiaries and agrees to make contributions for them.
RESP Facts • An RESP is a contract that is registered with Canada Customs and Revenue Agency (CRA). • The beneficiary can receive money from the plan to help pay for post-secondary education in a qualifying program. • RESP annual & lifetime limits exist.
Benefits of Saving in an RESP • Tax Sheltered Savings – interest compounds tax free for up to 25 years. • Taxable in hands of student (lower rate). • 20% Canada Education Savings Grant to a maximum of $400 per year or $7200 lifetime.
Benefits of Saving in an RESP • Transfer of unused income to RRSP (up to $50,000 per subscriber). • Time Sensitive - funds due to be available when beneficiary entering post-secondary studies.
Rules & Restrictions of RESP • A subscriber may contribute up to a maximum of $4,000 per year and $42,000 lifetime per child. • Contributions to an RESP can be made up to 21 years (to the age of 21 in Family Plan).
Rules & Restrictions of RESP • The RESP must be collapsed at the end of the 25th year after it is established. • Child can access the income upon attendance in a qualifying post-secondary program.
Rules & Restrictions of RESP • Income paid to a student is intended for costs associated with attendance in a qualifying educational program. • A Qualified Student is eligible to receive EAPs in excess of $5,000 if s/he has completed a 13 week Qualifying Educational Program during the previous 12 month period.
Rules & Restrictions of RESPs • Early withdrawal from an RESP may result in forfeiture of income. • Withdrawal of contributions at a time when a child does not qualify for access to income will result in the repayment of CESGs to the federal government.
Types of RESPs There are two types of RESPs on the market. Group Plans Individual Plans
Types of RESPs • Group Plans • The contributions made by all the subscribers whose beneficiaries share the same year of eligibility are pooled and invested together. • The payments for education are called “Education Assistance Payments” and the amount of an EAP depends on how many of the original beneficiaries remain when the beneficiaries reach their year of eligibility and how much money is in the pool.
Types of RESPs • Individual Plans • Family • Non-Family • The subscriber is free to decide when and how much s/he wants to contribute and can decide to take a break in contributions at any time.
Types of RESPs Family These plans can have one or more beneficiary. Each beneficiary must be related by blood or adoption to each living subscriber under the plan. Non-Family These plans can only have one beneficiary. There are no restrictions as to who can be a beneficiary.
Comparing Plans • Group • Subscriber agrees to contribute a fixed amount for a stated period of time. • Assets are pooled. • EAP based on funds and number of beneficiaries eligible at the time of payment. • Individual • Subscriber chooses when and how much to contribute. • Assets are managed separately. • EAPs derived from RESP earnings and interest. • Two types of Plans: Family & Non-Family.
Comparing Plans • Individual Non-Family • Only one beneficiary at any one time. • Beneficiary does not have to be related to the subscriber. • Beneficiary can be over 21 years old when named. • No beneficiary age limit for contributions (21 year rule applies). • Individual Family • Can have more than one beneficiary. • All beneficiaries have to be related to an original subscriber(s). • Beneficiaries must be under 21 years old when named. • Contributions for a beneficiary stop by the beneficiary’s 21st birthday.
Participants of an RESP • Subscriber • Beneficiary • Promoter • Canada Revenue Agency • Human Resources & Skills Development Canada
Subscriber • A subscriber is the individual who enters into a registered education savings plan (RESP) contract with a promoter, and names one or more beneficiaries for whom he or she will make contributions.
Who Can Be a Subscriber? • Anyone, including a parent, grandparent, aunt, uncle or family friend can set up and contribute to an RESP for a child. The subscriber must have a valid Canadian Social Insurance Number. • Two individuals who are spouses may be named in the Application as Joint Subscribers.
Beneficiary A beneficiary of a registered education savings plan (RESP) is a person to whom or on whose behalf, a promoter agrees to make education assistance payments.
Who Can Be a Beneficiary? • General RESP rules do not place age restrictions on beneficiaries, except in an individual family plan, where the beneficiaries must be under the age of 21 when enrolled and deposits are made. • Group Plan providers have placed age restrictions on the plans they provide.
Promoter • Offers RESPs to the public. • Informs custodial parent of existence of RESP. • Requests CRA to register ESPs on behalf of subscriber. • Applies to HRSDC for the Grant on behalf of the subscriber. • Receives and Deposits Grant Payments. • Informs subscriber of Account Status.
Promoter • Maintains and submits monthly records of RESP transactions (contributions, CESG, withdrawals) to HRSDC. • Confirms eligibility. • Makes Education Assistance Payments (EAPs) to eligible Beneficiary. • Determines if and when Grant must be repaid.
Canada Revenue Agency (CRA) • CRA is responsible for administering RESPs. • Accumulated Income Payment and RRSP Transfers • Beneficiaries • Contributions/ Over-contributions • Education Assistance Payments • Qualifying Investments for RESPs
Canada Revenue Agency (CRA) • Registering ESPs (RESPs) • Relationship to Subscriber and Beneficiary • Replacements • Residency • Transfers • Types of Education Savings Plans (Individual and Group)
Human Resources & SkillsDevelopment Canada (HRSDC) • HRSDC is responsible for administering the CESG. • Beneficiary – eligibility and changes to age restriction • Calculation of Grant and Grant Limits • CESG Process – How to obtain Grant • CESG System – Reporting CESG Transactions • Grant Portion of EAP
Human Resources & Skills Development Canada (HRSDC) • Grant Repayments • Grant Room and Carry Forwards • Order of CESG Payment • Order of CESG Withdrawal • Re-allocation of Grant money in Group Plans • Transfers in accordance to effects on Grant
Enrolment & Registration • Application for RESP must be completed with Promoter. • Social Insurance Number of subscriber required at time of signing. • If joint subscribers, must be spouses.
Enrolment & Registration • Social Insurance Number of beneficiary(s) must be provided at time of signing. • Any contributions made on behalf of a child for whom a SIN has not been provided will be deposited in an interest bearing escrow account. * Group Plans only
Contributions • A payment by a subscriber to a Registered Education Savings Plan for a beneficiary. • Contributions to registered education savings plans are not tax deductible from the subscriber’s income.
Contributions • Contributions to an individual RESP can be made for up to 21 years. • Contributions to a family RESP can be made on behalf a child until s/he is 21 years old.
Contribution Limits Annual Limit - $4,000 Lifetime Limit - $42,000 Historical Limits: 1993 Federal Budget Annual - $1,500 Lifetime - $31,500 1996 Federal Budget Annual - $2,000 Lifetime - $42,000 1997 Federal Budget Annual - $4,000
Over-Contributions • An over-contribution occurs at the end of a month when the total of all contributions made by all subscribers to all RESPs for a beneficiary is more than the annual or lifetime limit for the beneficiary. • CESG payments are not included.
Over-Contributions • If an over-contribution is not withdrawn within 30 days, the contributor is liable for a tax penalty at the rate of 1% per month for as long as the excess remains in the plan.
Over-Contributions • Over-contributions to the plan are included toward the lifetime limit for the beneficiary even if they have been withdrawn.
Education Assistance Payments • An EAP is an amount, other than a refund of principal to or for an individual to assist in furthering their education at a post-secondary level. • The beneficiary must become a Qualified Student.
Education Assistance PaymentsEligible Institutions • A post-secondary educational institution can be: • A university, college or other educational institution in Canada that has been designated for the purposes of the Canada Student Loans Act or the Canada Student Financial Assistance Act, or is recognized for purposes of the Quebec Student Loans and Scholarship Act.
Education Assistance PaymentsEligible Institutions • An educational institution in Canada certified by the Minister of Human Resources Development to be providing courses, other than courses designed for university credit, that give a person occupational skills or improve a person’s occupational skills.
Education Assistance PaymentsEligible Institutions • A university, college or other educational institution outside Canada that provides courses at a post-secondary school level, provided that the beneficiary is enrolled in a course that runs at least 13 consecutive weeks. • Attendance at an institution or enrolment in a distance education course qualifies as a means of participating in a program.
Education Assistance Payments$5,000 Cap • For RESPs entered into after 1998, the maximum EAP that can be made to a Qualified Student before they complete 13 consecutive weeks of a post-secondary program at an eligible institution is $5,000. • Upon completion of this period, the qualified student is entitled to receive the balance of the EAP.