REGISTERED EDUCATION SAVING PLAN
A Registered Education Savings Plan, or RESP, is savings vehicle used by parents to save for their children's post-secondary education in Canada. The main advantages of RESPs are the access to the Government Grants and a source of tax-deferred growth of savings. An RESP is a tax shelter, designed to benefit post-secondary students who are residents of canada. With an RESP, contributions are, or have already been, taxed at the contributor's tax rate, while the investment growth (and CESG) is taxed on withdrawal at the recipient's tax rate. An RESP recipient is typically a post-secondary student; these individuals generally pay little or no federal income tax, owing to tuition and education tax credits. Thus, with the tax-free principal contribution available for withdrawal, CESG, and nearly-tax-free interest, the student will have a good source of income to fund his or her post-secondary education.
Before investing for this plan, you must need a proper planning and instruction before getting any kind of benefit that comes under this plan. Although, it is one of the best saving plans for your kid to get the funds for the post auxiliary instruction – it however, requires some guidelines and instructions from an expert. There are different options available for Resp and we can help you in choosing the best option for you.
1) CESG: It is an incentive provided by Employment and Social Development Canada (ESDC) to the families or relatives who are saving money for their child’s post-secondary education through a grant based on the amount contributed to an RESP account. The maximum grant limit for one year is $500 for each child with lifetime limit $7200.
2) ACESG: The additional amount of Canada Education Savings Grant(ACESG) ) is money provided by the Government of Canada in addition to basic CESG for Canadian children from low-income and middle-income families.
3) Canada learning Bond: The government of canada deposits money(upto $2000) into eligible child’s RESP account every year even if you don’t contribute.
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