Giraffe & Friends Life Insurance Company
Education Savings Plan
Details of your Plan
Contract Number
Subscriber's Name(s)
Subscriber’s Birth Date(s)
Effective Date
Maturity Date
Beneficiary's Name
Beneficiary 's Birth Date
Relationship to you
Plan Deposit Information
First Deposit Date
Final Deposit Date
Deposit Amount
Guaranteed Amount
(the Guaranteed Amount does not include
Grants or interest earned on Grants)
1
Schedule “A” to Enrolment Application
Giraffe & Friends Education Savings Plan Terms
THIS CONTRACT is made, as of the date of acceptance of the application, between Giraffe & Friends Life Insurance
Company, a federally-regulated life insurance company duly incorporated under the laws of Canada (hereinafter
“Giraffe & Friends”), the individual(s) who executed the application relating hereto or a Public Primary Caregiver,
(hereinafter the “Subscriber”), and The Bank of Nova Scotia Trust Company, a trust company authorized to carry on
business in all provinces of Canada (hereinafter “Scotiatrust”).
WHEREAS the Giraffe & Friends Education Savings Plan (the “ESP”) is an individual education savings plan that has
been developed for the purpose of providing means for post-secondary education savings and providing financial
assistance by way of Education Assistance Payments (“EAPs”) to eligible students who enroll in Qualifying
Educational Programs;
AND WHEREAS The Bank of Nova Scotia Trust Company has agreed to act as trustee in respect of the funds
deposited pursuant to this contract and has agreed to irrevocably hold any property received under this ESP for
Qualifying Purposes only;
AND WHEREAS the Subscriber wishes to make funds available to Giraffe & Friends and Giraffe & Friends,
in accordance with the terms and conditions set out herein, agrees to pay or cause to be paid, Education
Assistance Payments to the Beneficiary designated in the application as a beneficiary eligible to receive EAPs
from Giraffe & Friends;
NOW THEREFORE, the parties hereto agree as follows:
1.
Definitions
(a)
“Academic Year” is a calendar year during which a Student is enrolled for a period of three weeks or more
at a Qualifying Educational Program at a Post-Secondary Educational Institution.
(b)
“ACES” means the Alberta Centennial Educational Savings Plan created under the Alberta Centennial
Education Savings Act.
(c)
“Accumulated Income Payment” means an amount under an ESP paid out of the Plan other than a
payment described in paragraphs (a) or (c) to (e) in the definition of Qualified Trust, to the extent that the
amount exceeds the Savings under the ESP.
(d)
“Application” means the application form executed by the Subscriber, and which is summarized herein
and which forms an integral part of the Contract.
(e)
“BCTES” means the proposed British Columbia Training and Education Savings Grant.
(f)
“Beneficiary” is any person named by a Subscriber on the application for a Plan who is under 13 years of
age at the time of application, or any person substituted for the original Beneficiary in accordance with the
Contract. See section 3(a) regarding certain legislative conditions which may restrict who may be a
Beneficiary under your Plan.
(g)
“CESG” means the Canada Education Savings Grant payable on behalf of an eligible Beneficiary in
accordance with the terms and conditions set out in the Canada Education Savings Act.
2
(h)
“CLB” means the Canada Learning Bond as that term is defined in the Canada Education Savings Act.
(i)
“Contract” or “RESP Contract” means this ESP together with the Application.
(j)
“Date of Maturity” means the date indicated in the Contract, unless such date is deferred by the
Subscriber upon written notice to Giraffe & Friends or unless such date is automatically deferred by
Giraffe & Friends under paragraph 2(f) hereunder to avoid the repayment of Grants and other applicable
amounts to the government, but in no case shall such date be later than 21 years after the year the Plan
became effective.
(k)
“Deposits” means a monetary contribution by a Subscriber to the Subscriber’s Plan on behalf of a
Beneficiary, but does not include any grants under or because of the Canada Education Savings Act, any
designated provincial program or any other program that has a similar purpose to a designated provincial
program and is funded, directly or indirectly by a province (other than an amount paid into the Plan by a
Public Primary Caregiver in its capacity as a Subscriber under the Plan).
(l)
“Depository” is The Bank of Nova Scotia.
(m)
“Depository Trustee” is The Bank of Nova Scotia Trust Company or its successor, responsible for the
custody and investment of Savings and earnings thereon until the Date of Maturity.
(n)
“designated provincial program” means a program administered pursuant to an agreement entered into
under section 12 of the Canada Education Savings Act or means a program established under the laws of
a province to encourage the financing of children’s post –secondary education through savings in
Registered Education Savings Plans.
(o)
“EAP” means, as defined in the Income Tax Act (Canada), any amount, other than a refund of payments,
paid out of an education savings plan to or for an individual to assist the individual to further the
individual's education at a post-secondary school level.
(p)
“ESP” means this Agreement made between the Subscriber, Giraffe & Friends and Scotiatrust under
which Giraffe & Friends agrees to pay or caused to be paid EAPs to or for a Beneficiary.
(q)
“Grants” means, collectively, amounts payable under the CESG, CLB, QESI, BCTES, SAGES and ACES.
(r)
“Guaranteed Amount” means Savings and investment income. It does not include Grants or income
earned on Grants.
(s)
“Lifetime Limit” has the meaning prescribed thereto by subsection 204.9(1) of the Income Tax Act
(Canada), as amended from time to time, and currently means, for 2007 and subsequent years, a
maximum of $50,000 of aggregate contributions to RESPs in respect of a particular Beneficiary during
the lifetime of such Beneficiary.
(t)
“Part-time Studies” means that a Student is enrolled in a Specified Educational Program at a
post-secondary institution. In order to receive EAPs for Part-time Studies, the Student must be at
least 16 years of age at the time of payment. Also, the total amount of EAPs made to the Student
under the RESP in the preceding 13-week period cannot exceed $2,500.
(u)
“Plan” means the Giraffe & Friends Education Savings Plan, a registered educational savings plan (within
the meaning of the Income Tax Act (Canada) as amended from time to time) offered by Giraffe & Friends
3
for the purpose of funding EAPs to Students pursuing a Qualifying Educational Program at a
Post-Secondary Educational Institution.
(v)
“Post-Secondary Educational Institution” has the meaning assigned to that term by subsection 146.1(1)
of the Income Tax Act (Canada), as amended from time to time. Generally, this will include all universities,
colleges and other post-secondary educational institutions in Canada, certain occupational training
institutions in Canada as well as universities, colleges and other post-secondary educational institutions
outside Canada at which a Subscriber's beneficiary was enrolled in a course of not less than 13
consecutive weeks.
(w)
“Public Primary Caregiver” of a beneficiary under an ESP in respect of whom a special allowance is
payable under the Children’s Special Allowances Act, means the department, agency or institution
that maintains the beneficiary or the public trustee or public curator of the province in which the
beneficiary resides.
(x)
“Qualified Investment” means an investment that meets each of the following criteria: (a) it is a qualified
investment for the purpose of the Income Tax Act (Canada) in respect of RESPs.
(y)
“Qualified Trust” means any trust corporation resident in Canada licensed or otherwise authorized under
the laws of Canada or a province to carry on in Canada the business of offering to the public its services
as a trustee who irrevocably holds property under an education savings plan for any of, or any
combination of the following purposes: (a) the payment of EAPs; (b) the payment of Accumulated Income
Payments; (c) the return of Savings to a Subscriber; (d) the repayment of amounts (and the payment of
amounts related to that repayment) under the Canada Education Savings Act or a designated provincial
program; (e) the payment to, or to a trust in favour of, designated educational institutions referred to in
subparagraph (a)(i) of the definition of that expression in subsection 118.6(1) of the Income Tax Act
(Canada) as directed by Giraffe & Friends in its sole discretion; or (f) the payment to a trust that
irrevocably holds property pursuant to a RESP for any of the purposes set out in paragraphs (a) to (e).
(z)
“Qualifying Educational Program” has the meaning assigned to that term by subsection 146.1(1) of the
Income Tax Act (Canada), as amended from time to time. Generally, a post-secondary program will
qualify if it is of not less than three consecutive weeks duration and requires students to spend not less
than ten hours per week on courses or work in the program.
(aa)
“Qualifying Purpose” in respect of an ESP means one or any combination of the purposes set out in the
definition of “Qualified Trust” above.
(bb)
“QESI” means the Quebec Education Savings Incentive.
(cc)
“RDSP” means a registered disability savings plan under the Income Tax Act (Canada).
(dd)
“RESP” means an ESP that has been registered for the purposes of the Income Tax Act (Canada).
(ee)
“RRSP” means a registered retirement savings plan under the Income Tax Act (Canada).
(ff)
“SAGES” means the Saskatchewan Advantage Grant for Educational Savings.
(gg)
“Savings” are the total Deposits, not including any income or interest earned thereon, made by or on
behalf of the Subscriber over the life of the Plan, less applicable service charges and deductions, all other
costs of administration and any applicable taxes.
4
(hh)
“SIN” is a social insurance number.
(ii)
“Specified Educational Program” means a program at a post-secondary school level that is not less
than 3 consecutive weeks duration and requires at least 12 hours of courses per month on courses
in the program.
(jj)
“Student” is a Beneficiary whose ESP is in good standing and who satisfies the requirements to receive
an EAP through enrolment in a Qualifying Educational Program at a Post-Secondary Educational
Institution in or after his or her date of maturity and at any subsequent time that a request for an EAP
is made.
(kk)
“Subscriber” is an individual or two individuals, who are spouses or common-law partners of one another,
acting jointly, of legal age and capacity or a Public Primary Caregiver, whose signed Application to
participate in the ESP is accepted by Giraffe & Friends. A Subscriber will also include any person who
after the death of an individual Subscriber (including the estate of such Subscriber), acquires the rights of
the Subscriber or makes contributions into the Plan and a Public Primary Caregiver who has under a
written agreement acquired a Public Primary Caregiver’s rights as a subscriber under the Plan.
(ll)
“Tax Amendments” means amendments to the Income Tax Act, Canada Education Savings Act,
Quebec Taxation Act, or the regulations thereto, or to any other taxation statute or regulation affecting
the establishment, operation, maintenance, taxation or payments to or from an RESP.
(mm) “Termination Benefit” means the difference between the Deposit amount and the Termination Charge,
less applicable and taxes.
2.
(nn)
“Termination Charge” means the amount expressed as a percentage of Deposits and shown on the table
at section 4 below.
(oo)
“Trust Deed” is the trust deed in respect of the Plan entered into among the Depository Trustee, the
Trustee and Giraffe & Friends, which establishes the terms of maintenance and investment of Savings
and payment of EAPs and the general terms of the trust.
(pp)
“Trustee” is The Bank of Nova Scotia Trust Company or its successor, responsible for receiving income
on Savings from the Depository Trustee at the Date of Maturity, maintaining and investing such funds and
paying EAPs.
The Plan
(a)
Responsibilities of Subscriber: The Subscriber, by having executed the Contract has agreed to enroll
in the Plan, and has agreed to request payments from the Plan on behalf of a Beneficiary, as and when
required by the Beneficiary for educational purposes at a time or times when the Beneficiary qualifies as a
Student eligible to receive EAPs.
(b)
Service Charges and Other Deductions: The Subscriber authorizes the following deductions from
Deposits or Savings, as the case may be:
(i)
service charges in respect of returned bank items, rejected credit card payments or missed deposits
($35.00 plus applicable taxes);
5
(ii) service charges in respect of certain special services provided to the Subscriber described in
paragraph 8, below.
(iii) Termination Charge in respect of the Plan being terminated. The amount of the Termination Charge
is a % of the Deposits and is described in 4 (c) below.
All service charge and other deduction amounts are subject to change. Giraffe & Friends will provide
notice of changes in service charges to Subscribers.
(c)
Lifetime Limit: The Income Tax Act (Canada) imposes the Lifetime Limit. All Deposits made by a
Subscriber to an RESP will constitute a contribution to an RESP and will be subject to the Lifetime
Limit. Contributions to an RESP will be eligible for CESGs in accordance with the guidelines set out
below. Contributions in excess of Lifetime Limit will be subject to a penalty tax under the
Income Tax Act (Canada).
(d)
Deposits: Subscribers must make Deposits in the amount and at frequency selected, and shown in the
Details of Your Plan section above, prior to the Date of Maturity, subject to the Lifetime Limit.
In the event that a Deposit is not made when it is due, the Subscriber will automatically be granted 30
days (including the date of the missed Deposit) to remit the Deposit. If the Deposit is not made within
30 days from the date that it is due, the Plan will be in default. If the Plan remains in default for a period of
five (5) months, Giraffe & Friends will terminate the Plan. Any Termination Benefit, as described in
paragraph 4(c), that is payable to the Subscriber will be returned to the Subscriber’s address maintained
on the books and records of Giraffe & Friends.
(e)
Payments to the Depository Trustee: Giraffe & Friends will instruct the Depository to, subject to
subparagraphs 2(b) and 2(f) hereof, remit all funds received by it to the Depository Trustee forthwith
following receipt thereof from the Subscriber.
(f)
Investment of Savings: Giraffe & Friends will instruct the Depository Trustee to receive funds remitted
to it on behalf of the Subscriber, including amounts received in respect of Grants, and invest the amounts
and any earnings thereon in Qualified Investments. Giraffe & Friends will instruct the Depository Trustee
to return the Savings for payment to the Subscriber upon the Subscriber’s request or other termination
of this Agreement at the address of the Subscriber maintained on the books and records of
Giraffe & Friends. Where Savings are returned to a Subscriber and their Beneficiary is not eligible to
receive EAPs at such time, Grants will be repaid to the government and investment income earned
thereon the can only be paid as either an Accumulated Income Payment (including transfer to the
Subscriber’s RRSP) or as a payment to a designated educational institution. In order to avoid having
Grants being repaid to the government, if Giraffe & Friends does not receive proof of eligibility for EAPs
in respect of a Beneficiary, Giraffe & Friends will automatically defer the Date of Maturity by one year.
Giraffe & Friends will provide the Subscriber with written notice by mail of maturity at the address
maintained on the records of Giraffe & Friends. If Giraffe & Friends does not receive written confirmation
from a Subscriber before the earlier of six years of the first mailing by Giraffe & Friends of the aforesaid
notice and the date that is the last day of the 35th year following the year the Contract was entered into,
that he or she wishes the return of his Savings, the Subscriber authorizes Giraffe & Friends to instruct the
Depository Trustee to disburse the amount of the Savings for the purpose set out in paragraph (e) of the
definition of Qualified Trust.
6
(g)
Payment to Trustee: At the applicable Date of Maturity, Giraffe & Friends will direct that income earned
upon Savings and income earned on amounts in respect of Grants shall be paid by the Depository
Trustee to the Trustee. Grant principal amounts will also be transferred by the Depositary Trustee to the
Trustee and shall be maintained by the Trustee. In the event that a Subscriber terminates the Plan prior
to the Date of Maturity, unless the Subscriber meets the conditions described below to receive an
Accumulated Income Payment, such income will be used for the purpose set out in paragraph (e) of the
definition of Qualified Trust and all amounts in respect of Grants will be repaid to the government. The
Trustee shall be responsible for the custody and investment of all amounts held in the Plan and will be
responsible for applying the amounts held therein to EAPs as provided herein. All investments by the
Trustee shall be “Qualified Investments”.
(h)
Accumulated Income Payment: If Subscribers meet certain conditions prescribed under the
Income Tax Act (Canada), they may be eligible to receive an Accumulated Income Payment consisting
of all accumulated earnings on Savings and all earnings on Grants. Generally speaking, to qualify for
receiving an Accumulated Income Payment at a particular time, each of the following conditions must be
met: (i) the payment must be made to one Subscriber only and not to two or more Subscribers jointly, (ii)
the Subscriber must be a resident of Canada, (iii) either (A) the payment is made after the 9th year that
follows the year in which the Plan was entered into and each living individual who is or was a Beneficiary
has attained 21 years of age before the payment is made and is not eligible to receive an EAP, (B) the
payment is made in the 35th year following the year in which the Plan is entered into, or (C) each
individual who was a Beneficiary under the Plan is deceased when the payment is made. The Minister of
National Revenue may, on written application by Giraffe & Friends, waive the conditions in (iii)(A) above,
where a Beneficiary suffers from a severe and prolonged mental impairment that prevents, or can
reasonably be expected to prevent, the Beneficiary from enrolling in a Qualifying Educational Program at
a Post-Secondary Educational Institution. A Subscriber who opts for and qualifies for receiving an
Accumulated Income Payment must include the amount received in their income for the year and must
terminate the Plan before March of the following year. An original Subscriber receiving an Accumulated
Income Payment may transfer such amounts into an eligible RRSP or RDSP in accordance with the
rules under the Tax Act. Amounts received by a Subscriber as an Accumulated Income Payment not
transferred into an eligible RRSP or RDSP in accordance with rules under the Tax Act, will be subject to
a penalty tax of 20% (12% in the case of Subscribers subject to a similar tax under a law of the province
of Quebec) in addition to any income tax otherwise payable. Receipt by a Subscriber of an Accumulated
Income Payment will result in a repayment of Grants in respect of the Subscriber’s Plan.
(i)
Transferring Accumulated Income Payments to a RDSP: A Subscriber may transfer Accumulated
Income Payments in respect of a Beneficiary to an RDSP if permitted under the Income Tax Act
(Canada). Accumulated Income Payments may be transferred to an RDSP only if the Beneficiary is also
the beneficiary under the RDSP that is receiving the funds and either (i) the Beneficiary has a severe and
prolonged mental impairment that prevents, or can reasonably be expected to prevent, the Beneficiary
from enrolling in Eligible Studies at a post-secondary educational institution, (ii) the Plan has existed for at
least 10 years and each Beneficiary (other than a deceased Beneficiary) under the Plan has reached 21
years of age and is not eligible to receive EAP, or (iii) the transfer is made in the year in which the Plan is
required to be terminated. The Subscriber and the RDSP holder must also make a joint election under
section 146.1(1.1) of the Income Tax Act (Canada) to have the transfer occur. Additional conditions under
the Income Tax Act (Canada) may apply in order to make the transfer and the election.
7
3.
Beneficiaries
(a)
The Subscriber nominates the person identified on the Application as his beneficiary to become eligible
for EAPs and acknowledges that a fundamental term of this Contract is the date of birth of the Beneficiary
indicated on the Application. No person may be designated as a Beneficiary under a Plan unless that
person's SIN is provided to Giraffe & Friends before the designation is made and either: (i) the person is
resident in Canada when the designation is made; or (ii) the designation is made in conjunction with a
transfer of property into the Plan from another RESP under which the person was a beneficiary
immediately before the transfer. In addition, after the Effective Date, no further contribution may be made
to any existing Plan in respect of a Beneficiary under the Plan unless: (i) the Beneficiary's SIN is provided
to Giraffe & Friends before the contribution is made and the Beneficiary is resident in Canada when the
contribution is made; or (ii) the contribution is made by way of transfer from another RESP under which
the Beneficiary was a beneficiary immediately before the transfer. A person's SIN need not be provided in
respect of a designation of a non-resident person as a Beneficiary under the Plan, if the person was not
assigned a SIN before the designation is made. Any contributions made on behalf of a child for whom a
SIN has not been provided to Giraffe & Friends upon enrolment, will be deposited in an escrow account
and held by Giraffe & Friends as escrow agent for the Subscriber pending receipt by Giraffe & Friends of
the required SIN. Deposits held in escrow will be invested the same way as investments made in a Plan.
If the required SIN is received within 24 months of the date of acceptance of the Subscriber’s Application
(or such longer period as may be agreed to by Giraffe & Friends), the original amount of the Subscriber’s
contributions and a refund of charges equal to the income earned on the escrowed Deposits will be
transferred out of escrow and contributed by the Subscriber to the applicable Plan. Income earned on
amounts deposited in the escrow account will not be taxable in the Subscriber’s hands but in the hands
of the Subscriber’s Beneficiary when it is paid out as part of an EAP. As long as a SIN is provided by the
24-month deadline (or such longer period as may be agreed to by Giraffe & Friends), contributions
deposited in the escrow account and contributed by the Subscriber to the applicable Plan will generally
be eligible for Grants once they are transferred to the Plan. If a SIN is provided by the 24-month deadline
(or such longer period as may be agreed to by Giraffe & Friends), the tax implications to Subscribers and
their Beneficiaries of entering into the escrow arrangement should be the same as if Deposits were never
held in escrow and were made directly to the Plan. Giraffe & Friends will refund all amounts contributed
into an escrowed plan for which the required SIN is not supplied to Giraffe & Friends within 24 months of
the date of the Subscriber’s Application (or such longer period as may be agreed to by Giraffe & Friends),
less applicable charges. Any income earned on such contributions will belong to, and will be taxed in the
hands of, the Subscriber. However, the amounts deducted under this contract may exceed the amount of
income earned on escrowed contributions. Therefore, subscribers who do not expect to obtain a SIN for a
particular child within the 24-month deadline are advised not to enroll and not to make contributions to a
Plan. The tax benefits described in this contract do not apply to an unregistered education savings plan
and Grants are not payable for contributions made to such a plan.
(b)
Substitution of a Beneficiary: The substitution of a Beneficiary is permitted, without income tax
consequences at any time, provided that both the Beneficiary and the proposed substitute beneficiary
are younger than 21 years of age at the time such election is made and that either a parent of the new
beneficiary is also a parent of the Beneficiary or that both beneficiaries are connected by blood
relationship or by adoption to the Subscriber.
Where there is any other substitution of a Beneficiary, all Grants are required to be repaid to the
government and each contribution made at an earlier time by a Subscriber in respect of the former
Beneficiary is deemed to have been made at that earlier time in respect of the new beneficiary.
8
This may also result in adverse income tax consequences to both the Subscriber and the new beneficiary
where deemed earlier contributions may have caused the Lifetime Limit in effect at such earlier time to
have been exceeded. In addition, substitution will not be allowed where the deeming rule above results in
there being deemed to have been a contribution in respect of the new beneficiary at a particular time
before the new beneficiary was born.
The Plan, in order to comply with the Income Tax Act (Canada), provides that no Deposits may be made
under a Contract after the 31st year following the year in which a Contract was entered into and that the
Contract must be terminated by the last day of the 35th year following the year in which the Contract
became effective.
4.
Withdrawal From Plan
(a)
At any time up to the date 10 days after the execution of the Application by the Subscriber, a Subscriber
may withdraw from the Plan by giving written notice, signed by all Subscribers, to Giraffe & Friends at
880 Laurentian Drive, Suite 200, Burlington, Ontario L7N 3V6. Upon such withdrawal, all Deposits will be
returned to the Subscriber, except that, where the Subscriber has caused an administrative function to
occur (such as processing a returned cheque, requesting a special service), the service charge or
deduction for such administrative function will be applied.
(b)
At any time after the 10-day period, a Subscriber may withdraw from the Plan (including transferring
to a plan of another RESP promoter or dealer) upon the giving of written and signed notice to
Giraffe & Friends at the address indicated above. Upon receipt of such notice, Giraffe & Friends shall
direct the Depository Trustee to either: (i) return Termination Benefit amount to the Subscriber, less the
Termination Charge referred to in section 2 hereof, to the Subscriber; or (ii) transfer the Termination
Benefit amount, less the Termination Charge referred to in section 2 hereof, to the RESP promoter or
dealer of the transferee plan. Where the Subscriber transfers to a plan of another RESP promoter or
dealer, the amount of Termination Benefit, Grants and interest earned thereon will be transferred to the
new promoter and the provisions of section 7 below will apply.
9
(c)
The Termination Benefit is calculated by subtracting the Termination Charge from total Deposits (plus
applicable service charges and taxes) in accordance with the table below:
Termination Charges as % of Total Deposits
Issue
Age/Duration
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
0
7.5%
7.0%
6.5%
6.0%
5.5%
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
0.0%
0.0%
1
7.5%
7.0%
6.5%
6.0%
5.5%
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
0.0%
2
7.5%
7.0%
6.5%
6.0%
5.5%
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
3
7.5%
7.0%
6.5%
6.0%
5.5%
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.0%
4
7.5%
7.0%
6.5%
6.0%
5.5%
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
0.0%
5
7.5%
7.0%
6.5%
6.0%
5.5%
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
0.0%
6
7.5%
7.0%
6.5%
6.0%
5.5%
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
0.0%
7
7.5%
7.0%
6.5%
6.0%
5.5%
5.0%
4.5%
4.0%
3.5%
3.0%
0.0%
8
7.5%
7.0%
6.5%
6.0%
5.5%
5.0%
4.5%
4.0%
3.5%
0.0%
9
7.5%
7.0%
6.5%
6.0%
5.5%
5.0%
4.5%
4.0%
0.0%
10
7.5%
7.0%
6.5%
6.0%
5.5%
5.0%
4.5%
0.0%
11
7.5%
7.0%
6.5%
6.0%
5.5%
5.0%
0.0%
12
7.5%
7.0%
6.5%
6.0%
5.5%
0.0%
Once a Subscriber terminates his or her Plan, it will no longer be registered as an RESP and will no
longer be subject to the beneficial tax treatment accorded to RESPs under the Income Tax Act (Canada).
5.
Eligibility for Education Assistance Payments
A Beneficiary becomes eligible to receive EAPs upon providing official confirmation of enrolment as a full-time
Student in a Qualifying Educational Program at a Post-Secondary Educational Institution on or after the Date of
Maturity and in each Academic Year thereafter in which a EAP request is made. The total amount of the EAPs
and all payments made under a RESP by Giraffe & Friends to the Student in the 12-month period that ends at
that time cannot exceed $5,000 or any greater amount that the Minister designated for purposes of the
Canada Education Savings Act may approve in writing and such approval is received by Giraffe & Friends
in advance of the relevant EAP payment.
Part-time Studies are permitted if the Student is enrolled in a Specified Educational Program at a
post-secondary educational institution. The Student must be at least 16 years of age at the time of the EAP
and the total amount of EAPs made to the Student under the RESP (and other RESPs) in the preceding
13-week period cannot exceed $2,500.
A Subscriber may, upon compliance with certain conditions, advance or defer a Beneficiary's Date of Maturity.
While a Beneficiary is a qualified Student, a Subscriber may request Giraffe & Friends to pay EAPs in any
amount required for educational purposes to the Beneficiary, subject to the limitations above and subject to the
maximum amount available in that Student's Plan, and at any time within the time constraint imposed by the
Income Tax Act (Canada) being that no requests may be made after the end of the 35th year following the year
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in which the Plan became effective. Each EAP will consist, pro-rata, of an amount in respect of Grant principal
and an amount in respect of interest earned on Savings and interest earned on Grants.
6.
Return of Principal at Maturity and Change in Date of Maturity
At the Date of Maturity of the Plan, the Savings will be repaid to the Subscriber, unless the Subscriber provides
Giraffe & Friends with other written instruction. If Giraffe & Friends does not receive written confirmation from a
Subscriber before the date that is the last day of the 35th year following the year the Contract was entered into,
that he or she wishes the return of his Savings, the Subscriber authorizes Giraffe & Friends to instruct the
Depository Trustee to disburse the amount of the Savings for the purpose set out in paragraph (e) of the
definition of Qualified Trust.
A Subscriber may elect to change the Date of Maturity at any time upon giving Giraffe & Friends 60 days written
notice prior to the original Date of Maturity. Where a Beneficiary anticipates enrolment into the first year of a
Qualifying Educational Program at a Post-Secondary Educational Institution before his Date of Maturity,
a Subscriber may, by written application to Giraffe & Friends, request that the Date of Maturity be advanced,
to a maximum of two (2) years earlier than the original Date of Maturity. For each year of shortening of the term
of the Plan, the Guaranteed Amount will be reduced by 7.5%.
7.
Transfer Between RESPs
(a)
CESG Issues: Generally speaking, for CESG purposes, a transfer of an amount from one RESP to
another RESP will be an “eligible transfer” and not result in CESG amounts having to be repaid where:
(a) the trustee of the receiving RESP has entered into an agreement with Human Resources and Skills
Development Canada; (b) either there is a common Beneficiary under both RESPs or the receiving RESP
has a beneficiary under the age of 21 who is a sibling of a Beneficiary under the transferring plan; (c) at
the time of the transfer, (i) either there is only one Beneficiary under the receiving RESP or if there is more
than one, they are siblings, or (ii) no enhanced CESG has been paid into the receiving plan and (d) the
receiving RESP conforms with the registration requirements of the Income Tax Act (Canada) for plans
entered into on or after January 1, 1999.
A transfer between RESPs, other than an “eligible transfer” (as described above), will result in
CESG amounts having to be repaid to the government. In addition, an ineligible transfer of pre-1998
contributions at any time in a year will result in a Beneficiary being an “ineligible beneficiary” for the
remainder of that year as well as the next two calendar years (unless the aggregate amount transferred
in a particular year is less than $200 or the transfer is made at a time the Beneficiary was a qualified
Student eligible to receive a EAP). During this time a Beneficiary will not accumulate contribution room
(see discussion regarding CESG contribution room below under heading “Canada Education Savings
Grant”), nor will any CESG be received on a Subscriber's contributions in those years.
(a)
Other Grant Issues: Other Grants may have to be repaid to the government in similar circumstances as
those described above in respect of CESG payments.
(b)
Income Tax Issues: For income tax purposes, a transfer between RESPs will not have adverse income
tax consequences if:
(i)
any beneficiary under the transferee plan was a beneficiary under the transferor plan; or
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(ii) a beneficiary under the transferee plan was less than 21 years old at the time of the transfer and one
of their parents was a parent of a beneficiary under the transferor plan.
Where a transfer between RESPs is one other than that described above, for income tax purposes, each
contribution made at an earlier time by a Subscriber in respect of a former beneficiary is deemed to have
been made at that earlier time in respect of the new beneficiary. This may result in adverse income tax
consequences to both the Subscriber and the new beneficiary where earlier deemed contributions may
cause the Lifetime Limit in effect at such earlier time to have been exceeded. In addition, a transfer
between RESPs will not be allowed where the deeming rule above results in there being deemed to have
been a contribution in respect of the new beneficiary at a particular time before the new beneficiary is
born. Furthermore, a transfer between RESPs will not be allowed where the transferring plan has
previously made an Accumulated Income Payment.
Where there has been any transfer between RESPs, for the purposes of the Income Tax Act (Canada):
(i)
the transferee plan is deemed to have been entered into on the earlier of the day the transferee plan
was entered into and the day the transferor plan was entered into; and
(ii) each Subscriber under the transferor plan will be deemed to be a Subscriber under the
transferee plan.
(i)
8.
Transfer to Another RESP Provider: A Subscriber may transfer his or her Plan to another RESP
promoter or dealer subject to: (i) consideration of the CESG and income tax issues described in
sections 7(a) and (c), above; (ii) the payment in full of any outstanding service charges or deductions.
Such transfer constitutes a withdrawal and, accordingly, is subject to section 4 hereof.
Special Service Requests
During the term of this Contract a special service charge of $100.00 plus applicable taxes will apply where a
Plan is transferred to another specimen plan.
All service charge amounts are subject to change. Giraffe & Friends will provide notice of changes in
service charges.
9.
Recognized Educational Institution
It is expected by Giraffe & Friends that for the purposes of determining whether a Student will be enrolled in
a Qualifying Educational Program at a Post-Secondary Educational Institution, Post-Secondary Educational
Institution may include universities, community colleges and military colleges and trade schools in Canada
recognized by the Association of Universities and Colleges of Canada, the Association of Canadian Community
Colleges or the American Association of Bible Colleges, Colleges d'Enseignement General et Professionnel
(CEGEP) and Registered Private Vocation Schools, and any other comparable educational institution
recognized as a Post-Secondary Educational Institution under the Income Tax Act (Canada). The foregoing
list may be subject to change from time to time in accordance with the definition of “designated educational
institutions” set out in the Income Tax Act (Canada).
Giraffe & Friends should be contacted before a Beneficiary enters any post-secondary program at any
institution to ensure that they are recognized for EAPs.
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10. Calculation of Education Assistance Payments
(a)
The amount of funds available for EAPs to Students is calculated by adding the principal amount of
Grants to all income accrued on Savings and on Grants held by the Depository Trustee in respect of a
particular Beneficiary. Amounts held in the Plan are available for the payment of EAPs, provided that at
the time of any such payment, the Beneficiary is enrolled as a full-time or part-time Student in a Qualifying
Educational Program at a Post-Secondary Educational Institution. While a qualified Student, a
Beneficiary may make requests for EAPs in any amount required for educational purposes (subject to
the limits applicable in certain circumstances - see discussion at paragraph 5 under heading “Eligibility for
Education Assistance Payments”) and at any time up to the maximum available for such qualified Student,
provided that any amounts in the Plan unclaimed by the end of the 35th year following the year in which
the Contract became effective will no longer be available for EAPs and will be dealt with as follows: (i)
unless a Subscriber is eligible to receive an Accumulated Income Payment (see discussion at paragraph
2(h) above) all unclaimed amounts in the Plan will be paid out by the RESP for the purpose set out in
paragraph (e) of the definition of Qualified Trust; and (ii) all remaining amounts in respect of Grant
principal will be repaid to the government. An original Subscriber under the Plan may transfer some or all
of their Accumulated Income Payment, if they are eligible to receive it, into an eligible registered
retirement savings plan on a tax deferred basis (see discussion above at paragraph 2(h) under the
heading “Accumulated Income Payment”).
(b)
Each EAP will consist of an amount in respect of available Grant principal and an amount in respect of
interest earned on Savings and interest earned on Grants.
(c)
The Subscriber acknowledges that funds available for EAPs are constituted from Grant principal, the
income earned on Savings and the income earned on Grants which is held by the Trustee until applied
for the payment of EAPs. The interest on such amounts is added to the amount available for EAPs
to a Beneficiary.
(d)
The amount available for EAPs is the amount in a particular Plan and it may include Grants, income
earned on Grants and investment income. The Subscriber acknowledges that Giraffe & Friends does
not make any representation, warranty or guarantee as to the amount of funds available for EAPs in
any particular year.
(e)
Any other assistance programs (other than Grants) that may be available under the Canada Education
Savings Act may affect the calculation of EAPs under this paragraph.
11. Canada Education Savings Grants
(a)
General: Subject to certain limits, the Government of Canada will deposit a Canada Education Savings
Grant (“CESG”) equal to 20% of the first $2,500 of annual contributions (or a maximum of $500 per year)
that parents and others make on behalf of a Beneficiary who is under 18 years of age to an RESP.
The CESG that may be paid for a particular year is increased by 20% (to 40%) on the first $500
contributed to an RESP for a child under 18 years of age if the child’s family has income in respect of
the year of $35,000 or less or by 10% (to 30%) on the first $500 contributed to the RESP if the child’s
family has income in respect of the year within certain income thresholds. For these purposes income
means family net income used to determine eligibility for the Canada Child Tax Benefit. The income
thresholds are adjusted for inflation annually.
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If the subscriber of an RESP is not the primary caregiver (or his or her spouse or common-law partner) of
the beneficiary, consent of the primary caregiver will be required before the enhanced CESG rate will be
paid on contributions made by such subscriber.
Subscribers will not be permitted to withdraw RESP contributions for non-educational purposes and
recontribute them in order to benefit from the enhanced CESG rate.
(b)
Contribution Room: Since January 1, 1998, your Beneficiary has been accumulating grant contribution
room for each year of his or her life. This will continue up to and including the year your child turns
17 years old, regardless of whether your child is a beneficiary under an RESP.
If you do not contribute the maximum amount of money that is eligible for CESG in any one year, your
accumulated CESG contribution room can be carried forward. In other words, you may use any unused
portion of your CESG at a later time to receive the maximum CESG. You may use any unused portion of
your CESG at any time, but you can only receive a maximum grant of $1,000 per year.
If you do not have any unused CESG room, only the first $2,500 of your RESP contribution will attract
the CESG. Any over-contribution will not be carried forward to the next year to attract the CESG. For
instance, if you contribute $3,000 in a year when you have no unused CESG room, you will get a grant of
$500 on the first $2,500, but the extra $1,000 will not attract the CESG in that year or in any other year.
(c)
No Effect on Lifetime Limit: The CESG is not included in calculating the Lifetime Limit. Subscribers can
therefore contribute up to $50,000 per Beneficiary.
(d)
Eligibility: To be eligible for the CESG, a Beneficiary must have a valid SIN and be a Canadian resident
at the time a contribution is made. To establish eligibility, Subscribers must certify that the Beneficiary is a
Canadian resident when the Plan is established and advise Giraffe & Friends of any change in the
Beneficiary's residency status in subsequent years. To qualify for participation in the CESG program,
a Subscriber simply needs to fill out a CESG application form. Giraffe & Friends will apply to the
government for the CESG on behalf of the Subscriber and the Plan will start attracting CESG for each
year in which contributions are made.
(e)
Withdrawals: Where there is a withdrawal of contributions that attracted CESGs, a CESG equal to
20% of those contributions will be returned to the federal government. The foregoing rules regarding
withdrawal do not apply to a transfer from one RESP to another which constitutes an “eligible transfer”
(see paragraph 7(a) above).
If the Beneficiary does not become a qualified Student, his or her CESGs must be repaid to the
government. No tax is payable by a Subscriber or a Beneficiary on interest earned on CESGs from a
taxation year throughout which the Plan was registered as an RESP. The amount of the CESGs added to
the EAP payable to a qualified Student will constitute income to such Student for tax purposes. Where a
Subscriber is eligible to receive Accumulated Income Payments (see description set out above at 2(h)
under the heading “Accumulated Income Payment”), the amount received which consists of interest
earned on CESGs will be treated in the same manner as interest earned on contributions (see paragraph
2(h) above).
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12. Canada Learning Bond
The Canada Education Savings Act has established the Canada Learning Bond (“CLB”) for children in low
income families. Generally, children born on or after January 1, 2004 will be eligible for a CLB in each year that
the child’s family is entitled to the National Child Benefit (“NCB”) supplement, up to and including the year in
which the child turns 15 years of age. The amount of the CLB will be $500 in the first year in which the child’s
family is entitled to the NCB supplement and $100 in any subsequent year of entitlement.
The CLB may be transferred into the child’s RESP with the authorization of the child’s primary caregiver. If the
CLB is not transferred to the child’s RESP by the time the child reaches 18 years of age, the child may open an
RESP in any year before turning 21 to hold the CLB. An additional $25 will be paid into the RESP to which the
initial CLB is deposited in recognition of one-time expenses associated with opening the RESP account. If the
child turns 21 years of age, any CLB not transferred to an RESP will be forfeited to the government. CLB
entitlements will be allocated to a specific child. The CLB will not count towards RESP or CESG contribution
limits. No CESG will be paid on CLB amounts transferred to an RESP.
To be eligible for the CLB, an application will have to be made for the Canada Child Tax Benefit unless a federal
Children’s Special Allowance is paid in respect of the child.
13. Alberta Centennial Education Savings Plan
The Alberta provincial government introduced the Alberta Centennial Education Savings Plan (“ACES”), a series
of grants (each an “ACES Grant”) to encourage parents to plan and save for their children’s post-secondary
education. Under ACES, the Alberta provincial government will make a one-time contribution of $500 to the
RESP of a child born to a resident of Alberta on or after January 1, 2005, a child under the age of one year
adopted by a resident of Alberta on or after January 1, 2005, or any other child defined as eligible by the
Alberta government if an application for the contribution is submitted on the child’s behalf.
Subsequent contributions of $100 will be available to children enrolled in school in Alberta, and having a parent
or guardian who is a resident of Alberta, who reach the ages 8, 11 and 14 on or after January 1, 2005.
Applications for the contributions will be required to be received within six years of the Beneficiary’s date of birth
in order to receive the $500 contribution and within six years of the Beneficiary’s 8th, 11th and 14th birthdays,
respectively, in order to be eligible to receive the subsequent $100 contributions. Giraffe & Friends will make this
application on behalf of eligible children. A minimum contribution of $100 must be made to the RESP within the
year immediately preceding each application for the ACES Grant.
Pursuant to section 12 of the Canada Education Savings Act, these grants will be administered by the Federal
government. Under the Alberta Centennial Education Savings Plan Regulation, these grants will have to be
repaid in circumstances similar to those requiring the repayment of CESGs and CLBs.
14. Quebec Education Savings Incentive
The Quebec Education Savings Incentive (“QESI”) encourages education savings by paying refundable tax
credits directly into a qualifying Beneficiary’s RESP. The lifetime maximum QESI credits that can be received
is $3,600 per Beneficiary and the amount of QESI that a Beneficiary receives is dependant on annual family
income. The maximum QESI that can be received in one year is $500 plus any additional QESI for the
current year.
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In order to receive the QESI, a Beneficiary must be a resident of Quebec at the end of the year in which the
QESI is claimed. In addition, the CESG eligibility requirements must be met in order for a Beneficiary to receive
the QESI. QESI eligibility ends in the year that the Beneficiary turns 17.
The Quebec Ministry of Revenue does not require a separate application for the QESI. Where the Subscriber
provides Giraffe & Friends with the documents that are required to apply for the CESGs, Giraffe & Friends
will apply to the Quebec Ministry of Revenue on the Subscriber’s behalf, unless the Subscriber provides
Giraffe & Friends with different instructions in writing. The QESI is issued directly to Giraffe & Friends and
Giraffe & Friends will deposit the QESI into the RESP and invest it on the Subscriber’s behalf.
Where the family income is below $37,500, the QESI will add 20% on the first $500 in contributions and 10%
on the next $2,000 in contributions made on an eligible Beneficiary’s behalf in each year, to a maximum of
$300 per Beneficiary per year.
Where the family income is between $37,500 and $75,000, the QESI will add 15% on the first $500 in
contributions and 10% on the next $2,000 in contributions made on an eligible Beneficiary’s behalf in each
year, to a maximum of $275 per Beneficiary per year.
Where the family income is over $75,000, the QESI will add 10% on the first $2,500 in contributions made on
an eligible Beneficiary’s behalf in each year, to a maximum of $250 per Beneficiary per year.
Families with an annual income below $75,000 are entitled to additional QESI on the first $500 that they
contribute to an RESP each year. In order to calculate eligibility for additional QESI, the family income
thresholds of $37,500 and $75,000 refer to the income in the taxation year preceding the given year of the
person who is at the beginning of January of the taxation year, an eligible individual regarding the Beneficiary
for the purposes of the calculation of the refundable tax credit for child support payable for such month, to which
may be added the income for the taxation year preceding the given year, of the spouse of such person at the
beginning of that month, in accordance with the Quebec Tax Act. Family income thresholds are indexed for
inflation and will be revised by the Quebec Ministry of Revenue annually.
Unclaimed QESI can be claimed in future years in the same way as CESGs. All eligible children began to
accumulate QESI room starting from the later of 2007 or the year in which they were born, regardless of whether
they were the Beneficiary of an RESP. However, QESI room does not accumulate in respect of years where the
Beneficiary was not a resident of Quebec at the end of the year. Eligibility to receive QESI ends in the year that
the Beneficiary turns 17 therefore eligibility for unclaimed QESI could be lost if too much is carried forward.
Unused additional QESI cannot be carried forward.
15. Saskatchewan Advantage Grant for Education Savings
The SAGES is a 10% matching grant in respect of all contributions to an eligible Beneficiary’s RESP to a
maximum of $250 per child per year. The amount will be paid directly into an eligible Beneficiary’s RESP by the
Government of Saskatchewan.
16. British Columbia Training and Education Savings Grant
The Government of British Columbia has announced a new one-time education savings grant of $1,200 paid into
an RESP for any British Columbia resident child who is born or after January 1, 2007. No matching or additional
Contributions are required in order to receive the grant. Starting in August 2015, and as soon as the
administrative process for this new program is in place, families with children resident in British Columbia who
16
have an RESP will apply for the grant when the child turns 6 years old. Families establishing a new RESP for a
British Columbia resident child who is six years old will apply at that time.
17. Amendment
(a)
Giraffe & Friends shall be entitled without the concurrence of the Subscriber or his Beneficiary to
make any amendment to this Contract or to the arrangements pertaining to the Plan so long as such
amendments are:
(i)
required to be made in order to comply with applicable law or an order or rule of any governmental or
regulatory authority, including, without limitation, the Tax Amendments; or
(ii) required to overcome administrative difficulties where such amendment does not adversely affect the
rights of any Subscriber or Beneficiary.
18. General
(a)
Assignment: This Plan may be assigned by Giraffe & Friends to any other corporation incorporated
under the laws of Canada, with the prior written approval of the Depository and the Depository Trustee
and such other approvals as may be required by law and provided further that such assignee enter
into such agreements as are deemed necessary or advisable by the Depository and the Depository
Trustee with respect to the performance of the terms and conditions contained in the Trust Deed and
in this Contract.
(b)
Automatic Termination: Notwithstanding any other term or condition herein, this Contract shall be
terminated on the last day of the 35th year following the year in which this Contract is executed and such
termination shall, for all purposes, be deemed to be a voluntary withdrawal from the Plan pursuant to
Section 4(a) hereof. This Contract shall also be terminated by Giraffe & Friends if i) no funds are
deposited into the Plan within 60 days from the Application date; and, ii) if the Plan remains in default for a
period of five (5) months from the date that the Deposit was due.
(c)
Joint Subscribers: If more than one Subscriber is a party to this Contract then all the rights hereunder
shall be enjoyed and exercised by each of them and upon the death of one joint Subscriber all rights and
obligations shall be enjoyed and exercised by the survivor(s).
(d)
Reporting: An annual statement will be issued in respect of each Plan. The statement will show the total
deposits collected, amount of remaining deposits, any Grants collected and income on Grants earned as
at the end of the reporting period.
(e)
Limits Imposed by the Income Tax Act (Canada): The Income Tax Act (Canada) penalizes Subscribers
whenever contributions by all Subscribers to all RESPs under which a particular Beneficiary is the
beneficiary exceed the Lifetime Limit.
(f)
Notice: Any notice required or permitted to be given hereunder shall be mailed by prepaid mail or
personally delivered. Notices mailed are deemed received on the fifth day following mailing and notices
delivered upon delivery thereof. Notice to Giraffe & Friends shall be addressed to 880 Laurentian Drive,
Suite 200, Burlington, Ontario L7N 3V6. Notice to the Subscriber shall be addressed to the address
maintained on the records of Giraffe & Friends. Any party may change its address for notice in the method
17
aforesaid and Giraffe & Friends may change its address for notice by making reference to a new address
on its website.
19.
(g)
Enurement: The Agreement shall be governed by the laws of Ontario and shall enure to the benefit of
and be binding upon the Subscriber, his heirs, administrators, and personal representatives.
(h)
Registration: Giraffe & Friends has ultimate responsibility for the Plan including the procurement of the
ESP agreement's acceptance for registration pursuant to subsection 146.1(2) of the Income Tax Act
(Canada).
Financial Consumer Agency of Canada
If you have a concern and wish to make a complaint, please visit the giraffe & friends website at
www.giraffeandfriends.com or call us toll free at 1-844-694-2633 for information on our Complaint Resolution
process. Please note that consumers may contact the following federal agency in Canada at any time for
information and assistance on complaints:
Financial Consumer Agency of Canada
427 Laurier Ave. West, 6th Floor
Ottawa, Ontario K1R 1B9
Website: www.fcac-acfc.gc.ca.
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THE BANK OF NOVA SCOTIA TRUST COMPANY
Per:
Name:
GIRAFFE & FRIENDS LIFE INSURANCE COMPANY
Per:
Name:
Chief Executive Officer
Per:
Name:
Corporate Secretary
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