Education cost is constantly increasing, protect the future of your children. A Registered Education Savings Plans (RESP), sponsored by the Canadian government, encourages investing in a child's future post-secondary education. Subscribers to an RESP make contributions that build up tax-free earnings.
The government contributes for children under age 18. Government matches the money up to a certain percentage and deposits it into the child’s RESP. The extra funds the government deposits are called the Canadian Education and Savings Grant. The amount provided is graduated, based on family income. Matching benefits apply only on the first $2,500 in contribution per year. The amount of the grant is capped at a maximum of $7,200.
If the child doesn’t pursue post-secondary education, you may be able to choose a new beneficiary. or, if he or she wants to travel first, you have 35 years to use the funds.
Earnings within an RESP are not taxed. When the funds are taken out for education, withdrawals are taxed in the student’s hands, often resulting in little or no tax.
The Canada Education Savings Grant (CESG) is a grant from the Canadian Government paid to a beneficiary's Registered Education Savings Plan (RESP). Government contributes 20% to the first $2,500 made into a RESP on behalf of an eligible beneficiary each year.
Low income families can get started with their children education savings, the Government of Canada will make an initial Canada Learning Bond deposit of $500 into child’s RESP. Additional deposits of $100 are automatically made to the RESP each year up until your child is 15 year of age, to a maximum of $2,000. No personal contributions are required.
The Canada Learning Bond is available to children who are Canadian residents born in 2004 or later, and have a Social Insurance Number. CLB is retroactive and payments accumulate each year the eligibility criteria are met until the RESP is opened for a child, up until the child turns 21.
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