The Registered Education Savings Plan (RESP) for Educational Planning

Facts about an RESP

A Registered Education Savings Plan (RESP) is a savings plan registered with the government that can help you save for your child’s post-secondary education.

Money invested in an RESP grows tax-deferred. The government helps contribute to your savings with education grants.

Later in life, as your child enrolls at a qualifying post-secondary institution, you can withdraw the funds for educational purposes. The payments made from these funds are called Educational Assistance Payments (EAPs).

Invested income and government grants received when withdrawn from the RESP are taxable. You do not pay tax on the contributions you made using your own money. Then these amounts are taxed in the tax return of the student – usually with little or no tax payable as students generally will be in the lowest tax bracket.

How do RESPs help my money accumulate?

  • Starting to use an RESP for your child early, while they are young, gives you more time for your contributed funds to grow.
  • The Canada Education Savings Grant (CESG) will match 20% of annual contributions, up to $500 per year
  • These contributions can continue until you reach the lifetime limit of $7,200 per child
  • Investing your Canada Child Benefit can assist you while saving enough to qualify for the maximum CESG amount

Federal Government-funded education grants

The Government of Canada supports saving for a child’s education by offering grants to a child’s RESP – offering you additional funds to accumulate educational savings.

The Canada Education Savings Grant (CESG)

The basic Canada Education Savings Grant (CESG) increases your year by year contribution by 20%, up to $500 per beneficiary each year to a lifetime limit of $7,200 per beneficiary. Additional CESG grants may be available, depending on your income.

Please talk to us for more information about the RESP and the CESG grant as it applies to your province.

Source: CRA