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Child Education

Registered Education Saving Plan (RESP)

RESPs are an excellent way for families to accumulate money for future education needs. An RESP is essentially a tax-deferred savings plan typically opened for a future post-secondary student. RESP contributions are not tax-deductible but the income earned on contributions compounds on a tax-deferred basis.

For 2007 and later years, there is no annual limit for contributions to RESPs, however, the lifetime limit on the amounts that can be contributed to all RESPs for a beneficiary is $50,000. Payments made to an RESP under the Canada Education Savings Act or under a designated provincial program are not included when determining if the lifetime limit has been exceeded.

Types of RESPs

Individual Plans
These plans can only have one beneficiary. There are no restrictions on who can be a beneficiary under these plans. This means that anyone can be the beneficiary of a non-family plan. The subscriber is free to decide when and how much he wants to contribute. The subscriber can also decide to take a break in contributions at any time.
Family Plans
These plans can have one or more beneficiary. However, each beneficiary must be connected by blood or adoption to each living subscriber under the plan, or have been connected to a deceased original subscriber. The subscriber can also decide to take a break in contributions at any time.
Group Plans
These plans are usually offered by non-taxable entities like foundations. These plans are administered on an age group concept. Thus all contracts for beneficiaries who are 9 years old are administered together. Contributions to a group plan are calculated by the promoter's actuary. The amount and frequency of these contributions stay the same as long as the beneficiary has not reached 18 years of age.

RESP Withdrawals: Educational Assistance Payments

An educational assistance payment (EAP) is a distribution to a beneficiary, under certain conditions, of amounts in an RESP.

For a payment to qualify as an EAP at the time it is made, the individual has to be enrolled full-time or part-time in a qualifying educational program at a post-secondary educational institution (either in attendance at the institution or enrolled in distance education courses). An EAP may be paid to an individual at any time in the six-month period immediately following the particular time at which the student ceases to be enrolled as a student.

Also, the maximum amount payable to an individual is $5,000, unless the individual has completed 13 consecutive weeks in a qualifying educational program, in the previous 12 months. The Minister designated for purposes of the Canada Education Savings Act is required to approve, on a case-by-case basis, an EAP amount that is higher than the $5,000 limit stipulated in the Act.

Beginning in 2007, a payment may also qualify as an EAP at the time it is made, if the individual is at least 16 and is enrolled as a student in a specified educational program. A specified educational program means a program at a post-secondary school level that is not less than three consecutive weeks in duration and that requires each student taking the program to spend not less than 12 hours per month on courses in the program. The total amount of EAPs made to the individual under the RESP (and other RESPs from the same promoter), in the preceding 13-week period cannot exceed $2,500. The Minister designated for purposes of the Canada Education Savings Act is required to approve, on a case-by-case basis, an EAP amount that is higher than the $2,500 limit stipulated in the Act.

Canada Education Savings Grant

On every dollar or the first $500 you save annually in your child's RESP, the Basic CESG will give your child 20 cents:

And, depending on your family income, your child could also qualify for the Additional CESG:

The CESG could add up to $400 on the next $2,000 saved when you save more than $500 annually.

The net family income amounts shown are for 2016. These income amounts are updated each year.

Please note that the maximum amount of grant per child is $7,200.

Canada Learning Bond

If your child was born after December 31st, 2003 and your family receives the National Child Benefit Supplement (NCBS), with your Canada Child Tax Benefit payment, your family may qualify for a $500 payment into an RESP by the federal government under the Canada Learning Bond (CLB) grant program.

The CLB is a grant provided by the Federal government of Canada to help modest-income families save for their child's post secondary education. In 2007, the supplement is generally available for families with a net annual income below $43,561.

A child, whose family is eligible for the CLB, may also receive an additional $100 per annum for up to 15 years. The parent must apply for the CLB before the child turns 18 to receive future and past benefits. Should the family become ineligible to receive the NCBS, the child is still eligible to receive CLB benefits for previous years when they were eligible.

The CLB grant is intended to benefit the child and can not be accessed by the parent or other siblings. Should the child choose not to proceed with post-secondary education, the CLB is to be repaid to the Federal government.