Yes, every time a subscriber makes a contribution to a Family plan, the subscriber must assign amounts to specific beneficiaries.
Are the government grants included in the calculation of the $50,000 lifetime contribution limit to an RESP?
No, the lifetime contribution limit of $50,000 excludes all government grants as well
as the distributions and income earned on the investments in the plan.
Yes. A lump-sum contribution of up to $50,000 lifetime maximum can be made all at once to
an RESP; however, the entire lump sum will not be eligible for a government grant.
Note: Future government grants would not be available on the lump-sum amount contributed.
Under the Income Tax Act, an Individual RESP plan with joint subscribers is not required to be divided between the parties following a separation or divorce. If you and your former spouse previously entered into an RESP contract as joint subscribers while married, you and your ex-spouse can both remain as joint subscribers post-separation and divorce, and contribute independently.
A subscriber can be a beneficiary only under a non-family plan.
No, an estate is defined as a trust. The Act’s definition of Education Savings Plan excludes a trust from being party to the contract.
Anyone who wants to contribute to a child’s education can contribute to an RESP, subject to the beneficiary’s annual and lifetime limits and plan requirements.
Yes. You can open an RESP at any age. While you can open a plan for a child, you can also name yourself or another adult as the beneficiary. Please note that all children up to the age of 17 are entitled to the Canada Education Savings Grant (CESG).
Note: An RESP allows adults to earn interest on their registered education savings plantax-free.
Yes. A child can be named as the beneficiary of more than one RESP account. However, you should be aware that there is a lifetime limit of $50,000 that can be contributed for each child. Be sure to find out if anyone else is making contributions to a plan for that child so that you don’t go over any limits when you decide how much money to put into an RESP.
Yes, a spouse/former spouse can replace the original subscriber in the event of marriage breakdown, if the separation or divorce is recognized by a decree, order or judgment.
It is also possible to change the subscriber after the death of the original subscriber for contracts that permit it and were entered into after 1997.
It depends. Some types of RESPs have no minimum deposit requirements, while others do. The Government of Canada will still add to your savings, no matter how little you put into your child’s RESP account.
No. You can open an RESP without having a bank account.
No, there is no residency requirement for RESP subscribers. However, a subscriber needs to provide a social insurance number (SIN) when the RESP is established.
Your money grows tax-free while it is in your RESP but you don’t get a tax deduction for the money you put into an RESP. The money that your investment earns while it is in the RESP won’t be taxed until money is taken out to pay for your child’s education. Money paid out of the RESP as an Educational Assistance Payment (EAP) is taxed in the hands of the student. Since many students have little or no other income, they can usually withdraw the money tax-free.
For 2008 and subsequent taxation years, contributions may be made into the plan by or for the subscriber up to the 31st year following the year in which the plan was opened.
There are no limits on the number of plans a subscriber can establish for a beneficiary, or the number of RESPs a beneficiary may have.
Up to $50,000 for each child (named in one or more RESPs). Although there are no annual limits on contributions made to an RESP, the Canada Education Savings Grant (CESG) will only be paid on the first $2,500 of contributions made every year. If the child has accumulated grant room, then the CESG will be paid on the first $5,000 of contributions made per year.
Every RESP is different. Some types require specific monthly contributions. Others let you put money into your RESP account whenever you want. The sooner you start to save, the sooner you’ll be earning interest, and the more your money will grow
The definition of adoption includes both a legal adoption and an adoption in fact.
An adopted child is related to his grandparents since the child is connected by adoption to his parents who are connected by blood relationship to their parents. Similarly, the child of a spouse living in a long-term common-law relationship is the adopted child in fact of the other spouse if that spouse exercises effective parental care and guidance on a continuing basis. The child will also be related to both sets of grandparents.
No, property of an RESP account cannot be attached to a loan.
Yes. Effective January 1, 2007, the lifetime RESP contribution limit per beneficiary was
increased to $50,000 and the annual contribution limit of $4,000 has been eliminated.
No, as long as the payment qualifies as an EAP at the time it is made there is no maximum limit. It should be noted that on August 12, 2008, a yearly EAP threshold of $20,000, indexed annually by the Consumer Price Index, was established to assist financial institutions in determining the reasonableness of an EAP request. The Canada Revenue Agency (CRA) will not question legitimate EAP requests below $20,000, nor will financial institutions be expected to assess the reasonableness of each expense item, as long as the conditions permitting an EAP are met.
Excess contributions to an RESP are subject to a 1% per month penalty for the excess amount contributed.
RESP money can be used to cover the student’s tuition, housing, transportation, books,
supplies and other incidentals relating to the student’s education.
It’s simple! Just follow these 2 simple steps:
Obtain a Social Insurance Number (SIN). You must have one for your child to open the RESP. There’s no fee. However, certain documents, such as a birth certificate or permanent resident card, are required.
- Choose an RESP provider that best suits your needs. RESP providers include most financial institutions (such as banks or credit unions group plan dealers, and certified financial planners). You can Book an Appointment online with us or call us at 403-225-8888 for more questions.
What documentation should a promoter get from a beneficiary before making an Educational Assistance Payments (EAP)?
The financial institution administering the RESP account is required to obtain proof that the beneficiary is enrolled in a qualifying educational program at a post-secondary school level at a Designated Educational Institution. A financial institution is not required to obtain receipts from a beneficiary as proof of expenses before making an EAP.
The government grants available for RESPs are:
- • Basic Canada Education Savings Grant (Basic CESG)
- • Additional Canada Education Savings Grant (Additional CESG)
- • Canada Learning Bond (CLB)
A family plan is an RESP set up by a subscriber for one or more beneficiaries. Each
beneficiary must be under 21 years of age at the time of designation and must be related
to the subscriber by blood or adoption. Children, grandchildren, brothers and sisters are
considered blood relationships, while nieces and nephews are not. Subscribers may not
designate themselves or a spouse or a common-law partner as a beneficiary under a family
An individual plan is an RESP set up by a subscriber for one beneficiary. A subscriber may
designate anyone as the beneficiary of the plan, including himself/herself, a spouse or a
common-law partner. There is no age restriction on the beneficiary of an individual plan.
The individual plan is the only plan available that allows the beneficiary to be unrelated
by blood or adoption and any beneficiary over 21.
Registered Education Savings Plan(RESP) is a tax-deferred education savings vehicle through which the federal government allows a subscriber to save money for a beneficiary’s post-secondary education. The subscriber makes contributions that accumulate tax-free earnings.
Additional CESG is a supplement to the Basic CESG, and the additional amount is based on
the net family income of the child’s primary caregiver. The primary caregiver is the person
who receives the Canada Child Tax Benefit (CCTB). The net family income is reported on
the primary caregiver’s CCTB statement provided by Canada Revenue Agency (CRA) each
July. The Additional CESG amount can change over time as the net family income changes.
Effective January 1, 2007, the maximum annual RESP contribution that will
qualify for the 20% CESG was increased to $2,500 from $2,000 for a maximum $500 Basic
CESG. The lifetime maximum of CESG that one beneficiary can receive is $7,200.
In order to be eligible for the Basic CESG, the beneficiary must be a Canadian resident at
the time of the contribution, and the contributions must be made before the calendar year
the beneficiary turns 18. In addition, certain conditions must be met for the beneficiary to
receive Basic CESG in the calendar year the beneficiary turns 16 or 17 years old.
The Canada Learning Bond(CLB) is a special bond paid to RESPs for children born on or after January 1, 2004
and whose families may not normally be able to save for their children’s post-secondary
education. RESP contributions are not required to receive the CLB.
- • $500 is paid for the first benefit year of eligibility
- • $100 is paid for any subsequent year of eligibility up to and including the child’s 15th year
- • The maximum benefit for any one child is $2,000
- • CLB payments do not count as part of the $7,200 CESG lifetime limit
An RESP must be terminated on or before the last day of the 35th year following the year in which the plan was entered into.
RESPs do let you play catch up with government grants but You can only make up missed contributions one year at a time. e.g on top of the $2,500 maximum you’re allowed to contribute to your RESP each year, you can make an additional payment of up to $2,500 to catch up on missed years of contribution. Whatever you do, don’t wait until your child is nine or older to start an RESP – since grants are only available until the year he or she is 17, there won’t be enough years left to make up the eight years’ worth of missed contributions.
Bottomline: the sooner the better
You can open an RESP account at most financial institutions (such as banks, life insurance company, brokerage firms, credit unions, etc.) or with Alberta Insurance Council(AIC) certified Insurance Agents or certified financial planners. You can Book an Appointment with us or call us at 403-225-8888 and one of our AIC certified Insurance Agents can help you setup an RESP.
There is no restriction on who can be the beneficiary of a non-family plan.
For Family RESP plans, the beneficiary must be related to the subscriber by blood or adoption and they must be 21 years of age or younger at the time they are named as a beneficiary.
For Individual RESP plans, you can designate any individual as a beneficiary (related or not related), only if the individual has a valid social insurance number (SIN) and they are resident in Canada when the designation is made.
Note: If you are opening an RESP account for a beneficiary that is 18 years of age and older, your RESP account cannot qualify for the Canada Education Savings Grant (CESG), as the grants are only available for beneficiaries 17 years of age or younger.
For Family RESP plans, subscribers can be parents, grandparents or siblings of children, including adopted children.
For Individual RESP plans, in general there are no restrictions on who can be the original subscribers. you and your spouse or common-law partner can be a joint subscriber under a single RESP.
Anyone (including parents, guardians, grandparents, other relatives or friends) can open an RESP account for a child.
If you open an RESP, the Government of Canada will help you save money through the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB). They are only available for your child if you open an RESP.
For example, the annual CESG available for each RESP beneficiary can be as much as $500.00 with the maximum life-time amount of grant money available set at $7,200.00. This is a huge benefit for anyone wishing to invest in their Child’s future education