Key Benefits of RESPs

Last updated October 2024

Here are a few key benefits of Registered Education Savings Plans (RESPs).

Government Grants

A major advantage of contributing to an RESP is the federal government's Canada Education Savings Grant (CESG), which can help your savings grow faster. Here's how it works:

• The federal government will contribute 20 per cent of what you put into your account, up to a $500 grant per year and a lifetime maximum of $7,200 for each child.
  
  
• Unused CESG grant amounts are carried forward for future years. Each beneficiary has their own pool, even if contributions are combined in a family RESP.
  
  
• For a child to receive the CESG at ages 16 and 17, contributions to all RESPs must total at least $2,000 before end of the calendar year they turn 15, or total at least $100 a year in any four years before the year the child turns 15, and funds cannot have been withdrawn in either case.

There are also other grants you may qualify for based on net family income or provincial residency. For example, if both the subscriber and beneficiary are residents of British Columbia, you may be eligible for the BC Training and Education Savings Grant (BCTESG). The BCTESG is a $1,200 one-time grant per eligible beneficiary with no financial contribution necessary. The subscriber may apply for a grant from the day the beneficiary turns six to the day before their ninth birthday. Also, the Quebec Education Savings Incentive (QESI), with a maximum total of $3,600 per beneficiary, is available to Quebec residents.    

The plan subscriber has until the last business day of each calendar year to contribute and qualify for any grants.

Tax-deferred Growth

• Investments can generally grow tax-free in an RESP until the funds are withdrawn.

• Tax on the income earned on investments within the plan is deferred until the beneficiary withdraws the funds (and is likely in a lower tax bracket).

Play Catch-Up on Contributions

If you've delayed opening an RESP or haven't contributed enough to get the maximum grant amount each year, you may still be able to take advantage of government grant money.

With the carry-forward option, you can double up on contributions to catch up on missed grant money; however, you can only use one previous year's worth of contribution room each year. Read Playing Catch-Up With RESP Contributions & Grants for more information on carrying forward RESP grants.