If you have kids, Registered Education Savings Plans (RESPs) and the alphabet soup of related programs—CESG, A-CESG, CLB, BCTESG, QESI—can seem overwhelming and out of reach. Especially if you don’t have any money to contribute anyway.
But, you might be missing out! You may qualify for free money simply by opening an RESP for your kids.
If your family income is less than $47,630, you can get up to $2,000 per child.1 The federal government will deposit $500 the year you apply for this grant (the Canada Learning Bond) and $100 each subsequent year. They’ll even throw in an extra $25 the first year to help offset costs. The younger your child is when you apply for this grant, the more they will benefit.
If you live in BC (regardless of your income), you can get $1,200 per child.2 You must apply for this grant (the BC Training and Education Savings Grant) when they are between six and nine but special extensions apply to kids born before 2010.
To receive this money you just need to open an RESP, designate your child as a beneficiary, and apply for the relevant grant. You don’t need to make any contributions to the RESP and receiving these grants will not impact your entitlement to other benefits.
If you have even a small amount of money to save, you qualify for a 20% to 40% top-up.3 In other words, if you invest $100, the government will deposit an additional $20 to $40 in your account. You qualify for the 20% top-up (the Canada Education Savings Grant) regardless of your family income. You qualify for the 30% or 40% top-up (the Additional Canada Education Savings Grant) based on your family income.
If you live in Québec, you qualify for another, very similar, provincial top-up program called the Québec education savings initiative.4
What’s the catch?
Nothing, really. But here are some things to keep in mind:
- You need to open your RESP at an institution that supports all the relevant grants. Outside of Québec, we highly recommend Wealthsimple—it’s free, online, has no account minimums, and applying for the grants is as easy as checking a box when you sign up.5
- The primary caregiver (the person who receives the Canada Child Benefit) must apply for the grants.
- The primary caregiver (and their partner, if applicable) must file a tax return every year so the CRA can calculate your net family income.
- Most institutions can set you up with simple investments so you don’t need to know anything about investing.
- It’s not just limited to university, your child can also use their RESP for college and most vocational training programs. The plan can stay open for 36 years, so they have lots of time to take advantage of the money.
- If your child ultimately doesn’t use it you can: transfer it to a sibling, transfer it to your RRSP on a tax-free basis, or withdraw it yourself and pay tax on any growth (any unused grants will revert to the government).
That’s it! Now go open that RESP!
5At the time of writing, Wealthsimple does not yet support the Québec education savings incentive.
Updated September 17, 2019.