Registered Education Savings Plan - RESP

Post-secondary education is an expensive proposition and having access to readily available funds for your child's post-secondary education is a great investment in his/her future. For a child born in 2019, the first year of university could cost as much as $30,931 (with residence) - that is approx. $127,446 for a four-year program.

It is becoming more difficult for many Canadian families to fund the cost of post-secondary education, especially if there is more than one child. So Ottawa jumped in with a savings plan called Registered Education Savings Plan - RESP, to encourage parents to save money for their kid's post-secondary education.

A RESP is a education savings account registered with Canada Revenue Agency (CRA), where an individual (subscriber) can save money for a student (beneficiary) and government pitches in by providing monetary grants (CESG, Additional CESG, CLB) and allow the money to grow TAX FREE.  Simply said - This is free money that the Federal Government will add to your RESP contributions.

RESP funds can be used to pay for the beneficiary's tuition, trade fees, registration fees, subscriptions for educational and research purposes, apprenticeship programs, books, computer, supplies, housing, living expenses or transportation.

Basic CESG:
The Basic CESG will add 20% on every dollar of the first $2500 of the annual contribution you save in your child's RESP account each year. This means that if you contribute $2500 over one year, government will add the maximum annual CESG of $500.

Additional CESG:
Additional CESG is offered over and above Basic CESG and depends upon your adjusted family net income. You could receive an extra 10% or 20% on every dollar of the first $500 you save in you child's RESP account each year. To be eligible to receive Additional CESG, RESP has to be an Individual or a Family Plan. Group RESP plans are not eligible for additional CESG and some Canadian banks does not even apply the Additional CESG.

Canada Learning Bond - CLB:
Your child is eligible for the CLB, if he or she was born on or after January 01, 2004 AND you receive the National Child Benefit Supplement (NCBS) under the Child Tax Benefit (CTB). Govt. offers initial CLB payment of $500 for the first year and thereafter, $100 every year until the end of the calendar year in which child turn 15 years up to a lifetime maximum of $2000.