As long as it's cancelled 31 days (or more) before the checkin date, the points are returned to your account to be used or banked (subject to normal deadlines).
If cancelled 30 days or less prior to arrival, they will go into a Holding Account- which means they cannot be banked and can only be used for a reservation booked within 60 days of arrival. They will expire at the end of your Use Year if not used.