Registered Education Savings Plan (RESP)

This plan allows subscribers to make non-deductible contributions to finance the post-secondary education of their children, grandchildren, or any other qualifying beneficiary. Beneficiaries under the plan, if enrolled in a qualifying educational program, may receive payments of up to $5,000 for the first 13-week period of study and any amount afterwards. Non-residents and individuals who were not assigned a social insurance number (SIN) cannot become RESP beneficiaries or benefit from RESP contributions. The investment income earned from the contributions is not taxed while remaining in the plan, but is added to the beneficiary’s income with the Canada Education Savings Grant (CESG) and Canada Learning Bond (CLB) when withdrawn from the plan. Contributions withdrawn from the plan are not taxable. They may be made for up to 31 years after the plan is opened (35 years if the beneficiary is disabled) and are subject to no annual limit but a $50,000 lifetime limit. The plan must be wound up after 35 years (40 years if the beneficiary is disabled). Family plan contributions can only be made for beneficiaries who are under 31 at the time of the contribution. Payments made under programs funded or administered by a province/territory do not reduce the RESP contribution limit and do not attract or reduce the CESG.

Beneficiaries under 18 qualify for the basic CESG calculated at 20% of the annual RESP contributions and subject to a $500 annual limit and $7,200 lifetime limit. Provided their net family income is below a certain level, they may also qualify for an additional CESG of up to $100 per year per beneficiary and a CLB of up to $2,000 per beneficiary payable over a 15-year period.

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