A Registered Education Savings Plan (RESP) is a government-approved plan that provides funding for a beneficiary's post-secondary education. With an RESP, a parent, grandparent, spouse, or common-law partner contributes to the plan. These contributions are not taxable as long as the money stays in the RESP. Income earned within the plan is not taxed until withdrawn.
The lifetime contribution limit to an RESP is $50,000 per child. When it comes time for the child to begin their post-secondary education, the accumulated funds can then be used to help finance their schooling.
Contributions are not tax-deductible, however, investment income is tax-sheltered as long as it remains in the RESP.
You decide how much and when to withdraw the funds. Use withdrawals for various educational costs, including tuition, books, equipment, accommodations, and living expenses.
Establish an RESP as soon as your child has a social insurance number. By starting an RESP early and contributing regularly, you can ensure that your child has the funds for their post-secondary education.
The Canada Education Savings Grant, a federal government program, may add to your RESP contributions (up to a maximum of $500 per year, per child). The grant is payable until the end of the calendar year in which a child turns 17. The maximum lifetime government payment is $7,200.
The Canada Learning Bond offered by the Government of Canada helps parents of modest incomes begin saving for their child's post-secondary education. The program includes a one-time payment of $500, followed by $100 for each subsequent year that the child qualifies — the maximum amount is $2,000.
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All deposits are 100% guaranteed by the Deposit Guarantee Corporation of Manitoba.
Canada Education Savings Grant
The Canada Education Savings Grant will give you 20% on every dollar of the first $2,500 you save in your child's RESP each year. Depending on your net family income, you could also receive an extra 10% or 20% on every dollar of the first $500 you save in your child's RESP each year.
The maximum lifetime grant the Government of Canada can give your child through the Canada Education Savings Grant is $7,200.
Your child can use the money to pay for full-time or part-time studies in a post-secondary institution or training program.
Canada Learning Bond
When modest-income families open an RESP for their child, they are in a position to take advantage of a federal government grant called the Canada Learning Bond. Under the program, if the child's primary caregiver receives the National Child Benefit Supplement, the child is eligible to receive the CLB. The government will make a one-time payment of $500 into the RESP of a child who qualifies for the Canada Learning Bond. The government will also deposit $100 each subsequent year that the child qualifies, up to a maximum of $2,000.
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