Registered Education Savings Plan (RESP)
An RESP is an education savings plan that has been registered under the Income Tax Act and offers significant advantages to families saving for their child's future education expenses.
An RESP allows the growth income earned on contributions to remain tax deferred until your child enters a post-secondary program (within 35 years) and the money is withdrawn. A nominated child can be eligible for government grants up to $9,200.
Taxes are paid by the student when money is withdrawn to pay for education costs. Since most students have little or no income, the student pays little or no income tax. RESPs can fund most full-time or part-time trade, college or university as long as government requirements are met.
Canada Education Savings Grant (CESG)
The CESG adds up to 20% ($500 maximum) to your annual contribution to an RESP per child annually, to a lifetime maximum of $7,200 or when the child turns 17 years old, whichever comes first.
Additional CESG
Families with net income less than $37,885** may be eligible to receive up to $100 more CESG yearly for each of their children. The amounts contributed, |
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up to the first $500 yearly to an RESP, may receive 20% of additional CESG (over the basic 20% CESG).
Families with a net income between $37,885 and $75,769** may be eligible to receive 10% additional CESG, up to the first $500 yearly (above the basic 20% CESG).
Children born on or after January 1, 2004 can be eligible for the CLB when the family receives the National Child Benefit (NCB) Supplement. Families can receive $500 for each child’s RESP in the first year they qualify for the benefit and may be eligible for $100 for each subsequent qualifying year to age 15. These funds can contribute up to $2,000 for an eligible child’s RESP.
** Amount subject to change.
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