Registered Education Savings Plans (RESPs) and the alphabet soup of related programs — CESG, A-CESG, CLB, BCTESG, QESI — can seem overwhelming. And considering all of the expenses that come with raising children, it can be hard to find extra money to contribute.
But it’s absolutely worth the effort. For one thing, you may qualify for free money simply by opening an RESP for your kids, no contribution required.
Free money (in the form of grants)
If your family income is less than $53,359, you qualify for the Canada Learning Bond (CLB). Once you apply, the federal government will deposit $500 the first year (plus another $25 to offset costs) and $100 each subsequent year — up to a total of $2,000 per child. The younger your child is when you apply for this grant, the more they will benefit.
Regardless of your income, if you live in BC you can get $1,200 per child by applying for the BC Training and Education Savings Grant. You need to apply when your children are between six and nine years old.
For either grant, you just need to open an RESP, designate your child as a beneficiary, and apply. You are not required to make any contributions to the RESP, and receiving these grants will not impact your entitlement to other benefits.
The Canada Education Savings Grant provides all families with a 20% top up. Depending on your family’s income, you can qualify for another 10-20%. What’s that mean? If you invest $100, the government will give you another $20-$40, totally free, up to a maximum of $500.
And If you live in Québec, there’s more: you qualify for a similar, provincial top-up program called the Québec Education Savings Incentive. The provincial government will match another 10% of your RESP contributions, up to a maximum of $250 per year, and low- and middle-income families may qualify for an additional amount up to $50.
There’s no catch. Really. The Canadian government are big fans of helping your kid pursue post-secondary education! But of course, there are a few things to keep in mind:
You need to open your RESP at an institution that supports all the relevant grants. Not every place will automatically complete the paperwork for you, so be sure to double check.
The primary caregiver (the person who receives the Canada Child Benefit) must apply for the grants.
The primary caregiver (and their partner, if applicable) must file a tax return every year so the CRA can calculate their net family income.
Your child can also use their RESP for college and most vocational training programs. The plan can stay open for 36 years, so they have lots of time to use the money.
If your child ultimately doesn’t use their funds, they can transfer it to a sibling, transfer it to an RRSP on a tax-free basis, or withdraw it and pay tax on any growth. (Any unused grants will revert to the government.)
The contribution deadline is December 31 of each calendar year. If you miss that deadline, you can catch up, but grants are capped at $1,000 per year, so you don’t want to fall too far behind.
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