Government grants to help grow RESPs

When you contribute to a child’s Registered Education Savings Plan (RESP), you’re giving the gift of knowledge. And, not only is the investment growth in the RESP tax-deferred, but you can also benefit from government grants to grow your savings even faster.

How do the grants work?

The most common grant is the Basic Canada Education Savings Grant (CESG). Here’s how it works for a parent (or grandparent) who wants to contribute the minimum amount to get the maximum grant:

• The parent, registered as the subscriber of the RESP for their child contributes $2,500. The government matches 20% ̶ the maximum of $500.
• The CESG has a lifetime limit of $7,200 per child. After the $500 grant, the remaining lifetime grant room is now $6,700, available until the end of the year the child turns 17.
• To receive the CESG at 16 and 17, contributions to all RESPs for the child must total at least $2,000 before the end of the year they turned 15, or at least $100 a year in at least four of the years before the end of the year they turn 15, and cannot have been withdrawn.

The parent (subscriber) has until the last business day of each calendar year to contribute and be eligible for any grants. For 2018, contributions must have been made by December 31 to be eligible for any applicable grants.

Grants can be carried forward, but are subject to a maximum of $1,000 per year – so if you try to “catch up” after a few years with a lump-sum contribution, you won’t receive the maximum annual grant. If the parent contributes $10,000 to make up for missing their annual $2,500 contributions four years in a row, the maximum CESG is $1,000 – only half of what it could have been if the contributions were made annually.

Grants available for RBC Direct Investing RESP accounts

Program and provider	Amount	Eligibility requirements
Government of Canada Basic Canada Education Savings Grant (CESG)	20% of up to $2,500 contributed annually (maximum $500) Lifetime limit of $7,200 per child, including the Additional CESG	Available up until the end of the calendar year in which the child turns 17 (special rules apply at ages 16 and 17) Beneficiary must have a valid social insurance number (SIN) and be a Canadian resident
Government of Canada Additional CESG	Paid in addition to the CESG Adds an extra 10% or 20% (depending on family income) on to the first $500 contributed to the RESP annually	Based on adjusted net family income: 20% if adjusted net family income is $47,630 or less* 10% if adjusted net family income is between $47,630 and $95,259*
Government of Canada Canada Learning Bond	$500 upon opening the RESP $100 each subsequent year for up to 15 years	Children born January 1, 2004 and after Based on adjusted net family income and number of children
Government of Quebec Quebec Education Savings Incentive	10% tax credit paid directly to the RESP on up to $2,500 contributed annually (maximum $250)	Beneficiary must be under age 18 and a resident of Quebec
*2019 amounts; income thresholds are adjusted annually

How much you can contribute to an RESP

Subscribers can contribute to an RESP for a maximum of 32 years (the year the plan opened plus 31 years), up to a limit of $50,000 per beneficiary.

Contributions are not tax-deductible to the subscriber or the beneficiary, and are not taxed upon withdrawal. Any tax on the income earned on investments within the plan is deferred until the beneficiary withdraws the funds, usually in a lower tax bracket.

• To access grant applications, visit the Forms page.
• To open a new RESP, visit the Open a New Account page. (Note that it can take three to five business days to process an application and grants for a new RESP.) 

The information provided in this article is for general purposes only and does not constitute personal financial advice. Please consult with your own professional advisor to discuss your specific financial and tax needs.