Registered Education Savings Plan

A Registered Education Savings Plan or RESP is a savings vehicle where parents can save for their children's post-secondary education. The advantages gained by having an RESP are tax deferred income and access to the Canada Education Savings Grant.

With an RESP contributions have been taxed at the contributors tax rate. Any investment growth that occurs inside the RESP is taxed upon withdrawal at the recipient's tax rate.
Generally an RESP recipient is a post-secondary student. These individuals will in general pay little or no federal income tax due to the fact that they will have tuition and education tax credits to reduce there income tax payable.

Canada Education Savings Grant

The Canada Education Savings Grant (CESG) is designed to complement RESP contributions. The Government of Canada contributes 20% of the first $2,500 in annual contributions made to an RESP.

The maximum lifetime contribution is $50,000 and any contribution above this amount is subject to taxation. This income is available to a post-secondary student upon withdrawal from the RESP.

Canada Learning Bond

The Canada Learning Bond (CLB) is provided by the Government of Canada to encourage low-income families to contribute to an RESP.
Families with children born on or after January 1, 2004, and who receive the National Child Benefit, will receive an additional $500 CLB when they open an RESP and $100 for each year they remain eligible.
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