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Bill C-253

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1st Session, 39th Parliament,

55 Elizabeth II, 2006

house of commons of canada

BILL C-253

An Act to amend the Income Tax Act (deductibility of RESP contributions)

R.S., c. 1 (5th Supp.)

Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

1. Paragraph 60(i) of the Income Tax Act is replaced by the following:

Premium, contribution or payment under RRSP, RESP or RRIF

(i) any amount that is deductible under section 146 or 146.1 or subsection 147.3(13.1) in computing the income of the taxpayer for the year;

2. (1) The definition “RESP annual limit” in subsection 146.1(1) of the Act is repealed.

(2) Subsection 146.1(1) of the Act is amended by adding the following in alphabetical order:

“earned income”
« revenu gagné »

“earned income” has the same meaning as in subsection 146(1);

“RESP deduction limit”
« maximum déductible au titre des REEE »

“RESP deduction limit” of a taxpayer for a taxation year means the amount determined by the formula

A + B

where

A is the taxpayer's unused RESP deduction room at the end of the preceding taxation year, and

B is the amount that is the lesser of the RESP dollar limit for the year and 18% of the taxpayer's earned income for the preceding taxation year;

“RESP dollar limit”
« plafond REEE »

“RESP dollar limit” for a calendar year means the money purchase limit for the preceding year;

“unused RESP deduction room”
« déductions inutilisées au titre des REEE »

“unused RESP deduction room” of a taxpayer at the end of a taxation year means,

(a) for taxation years ending before 2006, nil, and

(b) for taxation years that end after 2006, the amount, which can be positive or negative, determined by the formula

A + B – C

where

A is the taxpayer's unused RESP deduction room at the end of the preceding taxation year,

B is the amount that is the lesser of the RESP dollar limit for the year and 18% of the taxpayer's earned income for the preceding taxation year, and

C is the total of the amounts deducted by the taxpayer under subsection 146.1(2.01) in computing the taxpayer's income for the year.

(3) Paragraph 146.1(2)(k) of the Act is replaced by the following:

(k) the plan does not allow the total of all contributions made into the plan in respect of a beneficiary for a year (other than contributions made by way of transfer from registered education savings plans) to exceed the RESP deduction limit for the year;

(4) Section 146.1 of the Act is amended by adding the following after subsection 146.1(2):

Amount of RESP contributions deductible

(2.01) There may be deducted in computing a taxpayer's income for a taxation year such amount as the taxpayer claims not exceeding the lesser of

(a) the amount, if any, by which the total of all amounts each of which is a contribution paid by the taxpayer after 2005 and on or before the day that is 60 days after the end of the year under a registered education savings plan under which the taxpayer was the subscriber at the time the contribution was paid, other than the portion, if any, of the contribution that was deducted in computing the taxpayer's income for a preceding taxation year; and

(b) the taxpayer's RESP deduction limit for the year.

(5) Subsection 146.1(7.1) of the Act is amended by striking out the word “and” at the end of paragraph (a), by adding the word “and” at the end of paragraph (b) and by adding the following after paragraph (b):

(6) Subsection 146.1(7.2) of the Act is repealed.

3. Paragraph (a) of the definition “excess amount” in subsection 204.9(1) of the Act is replaced by the following:

(a) the RESP deduction limit for the year, and

Published under authority of the Speaker of the House of Commons

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