RESP's

As the cost of post secondary education has increased by over 10% per year over the last ten year, by the time your child or grandchild goes to university or college, a four year post secondary program could cost you over $100,000.

A RESP (Registered Education Savings Plan) is a federal government approved savings method which provides for incentives to families for their child's future education expenses. The plan allows for the future growth on any contributions to remain tax free until your child or grandchild enters post secondary education and the money is withdrawn. The federal government also contributes to the plan through the CESG ( Canada Education Savings Grant ).

A lifetime maximum of $42,000 can be contributed to the plan with a maximum yearly contribution of $4,000. The federal government will provide a grant of 20% on the first $2,000 contributed each year for each eligible child aged 17 or less, up to a maximum of $7,200. You have up to 21 years to make contributions to the plan and may have an RESP for up to 25 years.

As a parent, you may transfer to any sibling without penalty. Another option is having a rollover of up to $50,000 of interest transferred to your own or your spouse's RRSP assuming there is available contribution room. A less appealing option is having the interest as income subject to the applicable provincial and federal taxes. The contributions are always your own property.

IN ORDER TO RECEIVE THE GOVERNMENT GRANT YOUR CHILD NEEDS TO HAVE A SOCIAL INSURANCE NUMBER (SIN).

To apply for a SIN please click here.