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REGISTERED EDUCATION SAVING PLAN

What is the goal of a Registered Education Saving Plan?

The Registered Education Savings Plan, commonly known as an RESP, is a financial tool specially designed to accumulate savings to be used as a financial resource for a beneficiary's Post-secondary education. The federal government allows the investment income to grow, in a tax shelter, until the money is withdrawn from the plan.


Who can be a subscriber?

Anyone with a Canadian address and a social insurance number may subscribe to the RESP. This applies only to individuals (a company or trust may not act as subscriber to an RESP). Also, RESP allows the designation of a joint subscriber (spouse - married or common law). A subscriber or joint subscriber can contribute to several Registered Education Savings Plans for one beneficiary or different ones.


Who can be a beneficiary?

At issue, the beneficiary of RESP must be a child age 14 or under. As per federalgovernment regulations, the beneficiary must be a Canadian resident and must have a socialinsurance number (SIN) when a plan is created. It is the subscriber’s responsibility to submit aSIN request to Human Resources Centre of Canada (HRCC)

A child may be the beneficiary of more than one RESP. For example, a parent and grandparent may both be subscribers of separate RESPs for the same child.


What are the contribution limits?

The contribution limits set by the federal government are:

  • Annual limit: None;
  • Total limit: $50,000, per beneficiary, for life.

If the child is the beneficiary of more than one RESP, it is the subscribers' responsibility to ensure the contribution limit set by the federal government are not exceeded.


What are the tax consequences of excess contributions?

A 1% monthly tax penalty applies to contributions made on behalf of a beneficiary in excess of the total limit set by the federal government. The tax penalties are payable by each subscriber on his/her share of the excess contributions that are not withdrawn by the end of the month. The subscribers are solely responsible for ensuring that the contribution limit is respected.

The penalty taxes payable by each subscriber must be paid to Canada Customs and Revenue Agency within 90 days following the end of the year in which the excess contributions were made. The subscriber must complete the T1E-OVP form "Individual Income Tax Return for RESP Overcontributions for 1996 and Future Years."


How much RESP gets in grants?

  1. CANADA EDUCATION SAVINGS GRANT (CESG)

Since January 1998, the federal government has had a Canada Education Savings Grant (CESG) in place for contributions made to an RESP. This Grant is very lucrative as it significantly increases the savings for a child's post-secondary education.

On the first $500 you save annually in your child RESP,the Canada Education Savings Grant will give your child:


  • up to $200, if your net family income is $40,970 or less
  • up to $150, if your net family income is between $40,970 and $81,941, or
  • up to $100, if your net family income is more than $81,941.

When you save more than $500 annually, the Canada Education Savings Grant could add up to $400 on the next $2,000 saved.

The net family income amounts shown are for 2010. These income amounts are updated each year.


  1. CANADA LEARNING BOND (CLB)

The Canada Learning Bond is a grant offered by the government of Canada to help low income families to begin saving early for their child’s post-secondary studies. The RESP promoter applies to the federal government for the grant on behalf of the subscriber. The prescribed form, duly completed, must be sent to head office.

The CLB is paid directly into the RESP of the child who is named beneficiary.


CLB Amount

  • $500 the first year of eligibility
  • $100 in each subsequent year of eligibility until the child reaches age 15.

The cumulative limit of CLB offered to a child can therefore reach $2,000.


RESP Synopsis

RESP is an excellent way to build up a tax-sheltered fund to finance a child's post-secondary education. A registered education savings plan (RESP) is the ideal financial vehicle to meet the objective of accumulating funds for your child's post-secondary education and help you defray mounting education costs

  • You may designate a child, grandchild, nephew, niece, etc. as the beneficiary of an individual plan. There is no restriction on the relationship between the child and you.
  • For family plans, the beneficiaries must be related to the subscriber by blood or adoption.
  • You are eligible for a government grant of up to $7,200, or 20% of your annual contributions to the plan (up to a maximum of $500 per year).
  • The beneficiary obtains an income tax deferral on his or her investment income.
  • You may change the plan beneficiary.
  • Your protection against financial market fluctuations may attain and even exceed 100% of the capital invested.

Note: some insurance companies offer guaranteed bonuses and some RESP companies offer scholarships on top of Government grants (certain Conditions apply)


How can I register for RESP?

RESP contract must be signed in the province in which the agent holds a license. For more details, consult with one of our advisor. Call now 416 300 5055

Please note that we try our best for the accuracy of the information. However one must consult a qualified professional for more accurate and updated information on RESP. To set up an appointment Call now 416 300 5055.

416-300-5055

Sourabh Chadha

Financial Security Advisor