I-3 - Taxation Act

Section 1129.66.2 Disposition versions

2009-05-15

1129.66.2. If a contribution in respect of which an amount on account of an education savings incentive was received under section 1029.8.128 by a particular trust governed by a registered education savings plan, is withdrawn from the plan, otherwise than in connection with an eligible withdrawal or a transfer to another trust governed by another registered education savings plan, and no beneficiary under the plan is eligible to receive an educational assistance payment, the particular trust shall pay, for the taxation year in which the contribution is withdrawn, tax equal to the lesser of

(a)  the balance of the plan’s education savings incentive account immediately before the end of the year; and

(b)  the amount determined by the formula

A/B × C.

In the formula in subparagraph b of the first paragraph,

(a)  A is the balance of the plan’s education savings incentive account immediately before the end of the year;

(b)  B is the aggregate of the contributions made to the plan immediately before the end of the year in respect of which an education savings incentive was received by the particular trust, except such a contribution that was withdrawn from the plan in a preceding taxation year; and

(c)  C is the amount of the contribution withdrawn from the plan.

For the purposes of the first paragraph, “eligible withdrawal” means a withdrawal that is all or part of an excess amount of contributions to the registered education savings plan if the withdrawal is intended to reduce the amount of tax payable under Part X.4 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)).

2009, c. 5, s. 533.