Benefits of an RESP

RESPs offer tax deferral. This means that interest income and investment growth earned within an RESP are not taxed as long as the funds remain in the plan. Withdrawals from an RESP are taxed in the hands of the student, which usually means they pay little or no tax.

With the CESG, for an eligible beneficiary under the age of 18, the government matches 20% on the first $2,500 contributed annually to an RESP. The maximum total CESG the government will give, up to age 18, is $7,200 per beneficiary. The grant proceeds are invested along with your contributions, further enhancing the benefits of tax-deferred and compound investment growth within your plan.

A $500 CLB is provided for children of families who are entitled to the National Child Benefit Supplement and who are born after December 31, 2003. These children also qualify for CLB instalments of $100 per year until age 15, as long as they continue to receive the National Child Benefit Supplement. The total maximum CLB payable per child is $2,000. CLBs are allocated to a specific child; unlike CESGs, they cannot be shared with other beneficiaries. There is no requirement to make contributions in order to qualify for the CLB.

Alberta Centennial Education Savings (ACES)
The ACES Plan will contribute $500 to the RESP of any child born to an Alberta resident after December 31, 2004. An additional grant of $100 will be paid when the child reaches age 8, 11 and 14, provided he or she is still in school. The total ACES grant is $800, and can be shared among siblings.

Quebec Education Saving Incentive (QESI)
QESI is a tax credit introduced by the Quebec government to support the education savings of its residents. Annual RESP contributions of up to $2,500 are eligible for a basic tax credit of 10%. Lower-income families are eligible for an increased tax credit (5% or 10%) on the first $500 of annual RESP contributions.