A RESP is a savings vehicle used to finance post-secondary education. The subscriber of the account agrees to deposit a portion of his savings in the Registered Education Savings Plan, for his children, for his nephews or for small children, etc. to benefit from the educational assistance (EAP) financed by the Government of Canada and Quebec.

To be a beneficiary of this plan, you must:

1. Being a Canadian resident
2. Hold a Social Insurance Number

• And to be eligible for subsidies, the child must be under the age of 16

The subscriber of the plan may be a parent, a grandparent, or any member of the family, even a friend who wishes to accumulate money to contribute to the child’s post-secondary education. You can invest a maximum of $2500/year per beneficiary or a maximum amount of $50,000 for life per beneficiary.

It should be noted that RESP contributions are not tax deductible, and invested capital and its growth, grow tax-free inside the account, until the beneficiary begins their post-secondary education.

Federal and Provincial Grants

For each amount contributed within a RESP account, you are entitled to 2 types of grants: the Canada Education Savings Grant (CESG) and the Quebec Education Savings Incentive. These grants are available until the child reaches the age of 17.

• For the Canada Education Savings Grant, it represents 20% of the first $2,500 of contributions per year, up to a maximum of $500 per year per beneficiary, or $7200 for life per beneficiary. Namely, if you contribute $100 per month to the RESP, you will receive $20 in additional grant from the government. Grant supplements could also be added to the CESG, depending on your family income.
• For the Quebec Education Savings Incentive (QESI), it is paid directly to the RESP by the Quebec provincial government. A RESP can receive, an amount equal to 10% of the net contributions made in the year and up to a maximum of $250. For example, if you contribute $100/m, an additional grant of $10 will be paid within the account. The total grant disbursed can be up to $3,600 per eligible beneficiary for life. An additional amount can also be paid into the RESP, for families with low family incomes.

Therefore, a person who contributed $100/m within the RESP account will have received grants of an additional $30.

Finally, it is important to start the investment in the first years, after the birth of the child, to benefit fully from the government grants and establish a consistent investment strategy. Starting such investment as soon as your child is born allows you to enjoy better growth for years to come and better prepare yourselves for your child’s future.

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