An RESP helps you save for a child's education after high school, including university, college, trades and apprenticeships. Your contributions grow tax-deferred, and the government adds grant money on top.
The grants
- Canada Education Savings Grant (CESG): 20% of the first $2,500 you contribute each year, so up to $500 a year, to a lifetime maximum of $7,200 per child. Unused grant room carries forward, and you can catch up by up to $1,000 in grants a year.
- Additional CESG: an extra 10% or 20% on the first $500 each year for lower- and middle-income families.
- Canada Learning Bond: up to $2,000 for eligible lower-income families, with no contribution needed.
You can contribute up to $50,000 per child in total. There's no annual limit, but only the first $2,500 a year attracts the basic grant.
When your child goes to school
Withdrawals of grants and growth (educational assistance payments) are taxed in the student's hands, and students usually pay little or no tax. Your own contributions come back tax-free. Read how much to save and the drawbacks.
Common questions
How much do I need to contribute to get the full $7,200?
$2,500 a year for about 14 years, plus $1,000 in one more year, gets the maximum basic CESG of $7,200.
What if my child doesn't go to post-secondary school?
You can usually transfer the plan to a sibling, roll some growth into your RRSP if you have room, or withdraw your contributions. Grants are returned to the government. See RESP to RRSP.
Can grandparents open an RESP?
Yes. Anyone can open an RESP for a child, but the total grant per child stays capped at $7,200, so coordinate with the parents.