Registered Education Savings Plan (RESP)
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What is an RESP?
A Registered Education Savings Plan, or RESP, is a government-registered savings plan that helps you save for a child’s post-secondary education. And the federal government can add to your savings with education grants. Plus, your savings grow tax-deferred until withdrawn.
Build education savings for your child using the Canada Child Benefit (CCB)
The sooner you put your Canada Child Benefit into an Education Savings Plan, the more time your contributions will have to grow.
What are the benefits of RESPs?
A government grant helps the savings grow
To encourage saving for higher education, the federal and some provincial governments offer grant and tax incentive programs – without impacting your RESP contribution room.
You can contribute up to $50,000 per child and there are no taxes payable on the money earned in an RESP until it’s withdrawn. When RESP grants and earnings are withdrawn by the child for educational purposes, they are taxed at the student’s generally low tax rate.
Save Early, Earn More
Your contributions can grow surprisingly quickly when you use this special savings account, as the Government of Canada offers the Canada Education Savings Grant and the Canada Learning Bond exclusively to RESP subscribers.
For 2007 and later years, there is no annual limit for contributions to RESPs, however, the lifetime limit on the amounts that can be contributed to all RESPs for a beneficiary is $50,000
Canada Education Savings Grant (CESG)
Employment and Social Development Canada (ESDC) provides an incentive for parents, family and friends to save for a child’s post-secondary education by paying a grant based on the amount contributed to an RESP for the child. The Canada education savings grant (CESG) money will be deposited directly into the child’s RESP.
Who qualifies for the basic CESG
No matter what your family income is, ESDC pays a basic CESG of 20% of annual contributions you make to all eligible RESPs for a qualifying beneficiary to a maximum CESG of $500 in respect of each beneficiary ($1,000 in CESG if there is unused grant room from a previous year), and a lifetime limit of $7,200.
Who qualifies for the additional CESG
ESDC will also pay an additional CESG amount for each qualifying beneficiary. The additional amount is based on your net family income and can change over time as your net family income changes.
Canada Learning Bond (CLB)
The Canada Learning Bond (CLB) is money that the Government of Canada deposits directly into a child’s Registered Education Savings Plan (RESP) account to help parents get a head start on saving for their child’s education after high school.
Eligibility The Canada Learning Bond is available to children:
who were born after December 31, 2003; and
whose families receive the National Child Benefit Supplement (The Supplement is over and above the Canada Child Tax Benefit and is usually received by lower-income families).