Registered Education Savings Plan (RESP)

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An RESP is a registered savings account that allows savings for education, after high school, to grow tax-free. If you qualify, an RESP could also gain government money through the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB). This plan helps your family to save early for a child’s education after high school.

It's a contract between an individual (other than a trust) who is the subscriber, and a person or organization, who is the promoter. The subscriber (or a person on behalf of the subscriber) makes contributions to the RESP, which then earns income. In return, the promoter of the plan agrees to pay the income as educational assistance payments to one or more beneficiaries designated in the contract.

There is no annual limit for contributions to an RESP. The lifetime limit is $50,000. In the case of oversubscription, there will be a penalty at 1% per month and a risk of the registration getting cancelled.

Anyone can open an RESP account, e.g., parents, grandparents, friends, other relatives, and guardians.

Contributions can be made for 31 years after the year in which the plan is initiated.

An RESP does not reduce the amount eligible for OSAP. (Ontario Student Loan)

Note: RESP contributions are not tax-deductible from the subscriber's income. On the withdrawal by the student (i.e., the beneficiary) it is taxable income for them. However, as students do not usually have high amounts of income while studying, it is often tax-free income.

Canada Education Savings Grant (CESG)

This grant from the Government of Canada was introduced in 1998, and can help you start saving for your child's education after high school. Your child can use the money for full-time or part-time studies in an apprenticeship program, CEGEP, trade school, college or university. It has a lifetime limit of $7,200.

A CESG is available up until the end of the calendar year in which the beneficiary turns 17.

A CESG is based on contributions made to an RESP in respect of an eligible beneficiary and is comprised of two components:

Basic CESG

20% on the first $2,500 annual contributions = $500. (all income levels)

Additional CESG

20% on the first $500 annual contribution (income less than $48,536) = $100

10% on the first $500 annual contribution (income between $48,536 & $97,069) = $50

Canada Learning Bond (CLB)

A Canada Learning Bond (CLB) is money that the Government of Canada adds to a Registered Education Savings Plan (RESP) for children from low-income families. A child having no RESP account is also eligible to receive a CLB.

Maximum CLB = $2,000. If a family receives a national child benefit, the initial payment = $500. Thereafter, an annual payment of $100 per year up to age 15. A CESG and a CLB do not become payable to non-resident beneficiaries.

Your child will thank you tomorrow for the education savings plan you created today!

For more information on CESGs and CLBs, please visit: Learn More