Are you leaving money on the table?
Education Savings: Are you taking advantage of the government incentives?
The content in the article below is meant for Canadian investors only.
Did you know RESP (Registered Education Savings Plan) savings can be supplemented with government education savings initiatives, with the main one being the Canada Education Savings Grant (CESG) paid by the federal government?
Key Facts about the Canada Education Savings Grant (CESG)
All RESPs are eligible for Basic CESG
The Government of Canada will match a percentage of your RESP contributions by depositing the CESG directly into the RESP
$500 each year (20% of the first $2,500 of annual contributions per beneficiary)
Up to $1,000 if carry-forward room is available (grant room is cumulative and can be carried forward). So if you cannot make a contribution in any given year, you can carry over unused Basic CESG.
CESG paid into a Family Plan RESP may be used by any beneficiary of the RESP to a lifetime maximum of $7,200 per beneficiary – this includes both the Basic and Additional CESG
What determines if you are eligible for the CESG?
Beneficiary and subscriber must have a valid SIN and be a Canadian resident
Contributions must be made before the end of the calendar year the beneficiary turns 17
Special rules apply to beneficiaries age 16 and 17
How much of a difference can the CESG make?*
Family #1 – no CESG
Invested $100 bi-weekly into a non-registered account
This investment doesn’t qualify for the Canada Education Savings Grant (CESG)
Family #2 – RESP with CESG
Also invested $100 bi-weekly – but into an RESP account
This investment qualifies for the CESG – 20% of their monthly contributions
Do you qualify for additional education savings grants?
Family Income CESG Available
<$48,536 $600: $500 (Basic CESG) + $100 (additional 20% on the first $500 of annual contributions per beneficiary)
$48,536–$97,069$550: $500 (Basic CESG) + $50 (additional 20% on the first $500 of annual contributions per beneficiary)
How do I apply for the CESG?
Ensure your tax returns are up to date
Open and contribute to an RESP with the child named as a beneficiary – make sure the RESP promoter allows for the Additional CESG payment as not all do
Complete the CESG application form. Your RESP provider will then request the CESG.
Once the application is approved, the appropriate amount will be deposited directly into that RESP.