Registered Education Savings Plan

Registered Education Savings Plans (RESP) is a special savings account sponsored by the Canadian government to encourage parents to save early for their children's future education expenses. In addition to their own savings, parents can receive corresponding grants at the federal and provincial levels, as well as from other programs that help low-income families.

The government subsidy includes two parts: Canada Education Saving Grant (CESG) and Canada Learning Bond (CLB).

The Canada Education Savings Grant (CESG) will provide grants of 20% of your annual contributions, capped at $500 per beneficiary per year and $7,200 per beneficiary for life. Depending on your income, more CESG grants may be available. The Canada Learning Bonds are issued to children born on or after January 1, 2004, whose families are eligible for the grant. The Canada Learning Bond (CLB) can contribute up to $2,000 per child to your RESP.

The funds in the RESP account can be invested according to their own risks and returns, including savings, bonds, mutual funds, EFT, stocks, etc. Investment income and government grants you receive when you withdraw money from a RESP are taxable, but contributions you make with your own funds are not taxed. These amounts are taxed by the student, and as students generally apply the lowest tax brackets, this usually means paying little or no tax.

When your child is admitted to an eligible post-secondary institution, you can withdraw funds for educational purposes. Payments made using these funds are called Educational Assistance Payment (EAP).

A Registered Education Savings Plan (RESP) can fund full-time or part-time vocational training, college and university study-related expenses.