College & University – RESP – Children’s Education Plans:

{ on Jun21 2018 | in: Business | Community | Feature }

Here are some basic things that every parent should know about these plans.

  1. Government grants

The federal government adds to your RESP savings each year through the Canada Education Savings Grant (CESG) to a maximum of 20% up to $500 per year. Lower-income families may also qualify for the additional CESG on the first $500 contributed if the child’s family has net income of less than $91,831.


  1. RESP savings grow tax free

You don’t pay tax on any investment earnings if they stay in the RESP. That means your savings can grow faster.  Simply put you are not paying any tax on your growth dollars.


  1. Withdrawals are taxed in the hands of the student

When your child enrols in college or university, they can start taking withdrawals, called educational assistance payments (EAPs), from their RESP.  EAPs include the investment earnings and government grant money in the RESP. Tax on EAPs is payable in the hands of your child — not you. Since students tend to have little or no income, they likely won’t have to pay much tax on the payments. Contributions can be withdrawn by you or by the student tax-free. The principal that was contributed by the parents is paid back to the parents’ tax free of course.


  1. Many Different investment options

You can choose investments that are safe or more aggressive.  These investments best suit your investment goals, risk tolerance, and time until your child needs the money.


  1. Grandparents and family can contribute

Anyone can set up an individual RESP for your child – not just you. Your child’s RESP can grow more quickly with contributions from Grandparents and family. Consider encouraging monetary gifts on special occasions (birthdays, Christmas etc.) to contribute to your child’s RESP.


  1. RESP accounts can stay open for 36 years

If your child chooses to defer their education plans after high school, they can still use the RESP money when they are ready to go back to school.  Also, some plans allow for International Study so that your child can attend a College or University anywhere in the world.




  • Government contributions
  • Tax-free compounding
  • Payments taxable in the student’s hands
  • Variety of investment options

There are many plans in the market and you must choose the plan that gives you the best options and earnings for your child.  For our clients we offer and recommend the safest RESP options with excellent growth.

For any additional information or questions please contact Sharan Gill at 604-897-3397.




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