RESP (Registered Education Savings Plans)
Federal government has provided special tax benefits and incentives
for those saving for post-secondary education. While you do
not get a tax deduction for contributions to a Registered
Education Saving Plan (RESP), the investment income earned
by the RESP is not subject to income tax until the funds are
withdrawn. When the funds are withdrawn, the investment income
must be used for the designated educational purposes and is
taxable to the student, not the contributor. An RESP will:
► Allow you to take advantage
of the Canada Education Savings Grant.
► Generate a greater pool of
savings over a shorter period of time since your savings are
tax-sheltered until withdrawn.
► Reduce your future taxes.
It allows you to shift the growth generated by your contributions
to your children, where it will be taxed at a lower rate when
► Enable you to invest your
savings based on your individual needs, so you can achieve
the right balance between long-term growth and protection
Canada Education Savings
At present, the federal government provides a Canada Education
Savings Grant (CESG) equal to 20% of the first $2,500 of annual
contributions to an RESP for children up to the age of 17.
The maximum annual grant is $500. The total lifetime maximum
grant is $7,200 per child.
unused grant “contribution room” can be carried forward to
future years. In order to receive the grant, the child must
have a Social Insurance Number.
Individual or Family
to financial planner about whether an individual or family
RESP is more appropriate for you. Any one child can be the
beneficiary of an individual plan. A family plan may have
more that one beneficiary, but all must be directly related
to the subscriber by blood or adoption.
The information contained in this commentary is designed
to provide you with general information only, and is not intended
to be comprehensive advice applicable to the circumstances
of any individual. We strongly urge you to seek professional
assistance before acting upon information included herein.