For families with children, a Registered Education Savings Plan (RESP) can help finance post-secondary education. The account subscriber can name one or more beneficiaries on an RESP account and each beneficiary must have their own Social Insurance Number in order to complete an application.
Some of the advantages of RESPs include:
- Tax deferral of compounding income and growth
- Based on a family’s net income and the amount contributed, a government RESP grant is available
- The Basic Canada Education Savings Grant (CESG) matches 20% of what the subscriber contributes to an annual maximum of $500 per child
- The BC Training and Education Savings Grant (BCTESG) offers BC children a one-time $1,200 RESP deposit when they turn 6 years old
- For lower income families, the Additional CESG could be available along with the Canada Learning Bond which families could qualify for even without contributing to an RESP. Completing an RESP application is the minimum requirement.
- When money is withdrawn from an RESP, the student typically pays little tax, due to a low income tax rate
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