REGISTERED EDUCATION SAVINGS PLAN (RESP)
This plan allows subscribes to make non-deductible contributions to finance the post-secondary education of their children, grand-children, or any other qualifying beneficiary. Beneficiaries under the plan, if enrolled in a qualifying educational program, may receive payments of up to $5,000 for the first 13 week period of study and any amount afterwards. Non-residents and individual who were not assigned a Social Insurance number (SIN) cannot become RESP Beneficiaries or benefit from RESP contributions. The investment income earned from the contributions is not taxed while remaining in the plan, but is added to the beneficiary’s income with the Canada Education Saving Grant (CESG) and Canada Learning Bond (CLB) when withdrawn from the plan. Contributions withdrawn from the plan are not taxable. They may be made for up to 31 years after the plan is opened (35 years if the beneficiary is disabled) and are subject to no annual limit but a $50,000 lifetime limit. The plan must be would up after 35 years (40 years if the beneficiary is disabled). Family plan contribution can only be made for beneficiary who is under 31 at the time of the contribution. Payments made under program funded or administered by the province/ territory do not reduce the RESP contributions limit and do not attract or reduce the CESG.
Beneficiaries under 18 qualify for the basic CESG calculated at 20% of the annual RESP contributions and subject to a $500 annual limit and $7,200 lifetime limit. Provided their net family income is below a certain level, they may also qualify for an additional CESG of up to $100 per year per beneficiary and a CLB of up to $2,000 per beneficiary payable over a 15 year period.
An RESP subscriber and an RDSP holder may jointly elect to have the investment income earned from an RESP Transferred tax-free to an RDSP if the beneficiary under both plans is the same.