A Registered Education Savings Plan (RESP) is a regulated account designed to help you save for your child’s education. An individual RESP account can be opened in the child’s name who will later use the funds for college or university tuition, books, and living expenses. The lifetime limit that can be contributed to an RESP account for a beneficiary is $50.000. The Canada Education Savings Grant (CESG) will match 20% of what you contribute to the account to a maximum of $500 per year and $7200 over the lifetime of that account. The Government grants must be repaid back to the Government.

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Once the Child enrolls in a post-secondary institution, she or he will only owe tax on the earnings and government grants. The funds made by the contributor will not be subject to tax. The funds in the RESP account are ONLY transferable to a sibling. If the child decides to not enroll in post-secondary education, the funds from the RESP account can be transferred to a sibling, or in the absence of a sibling the money can be transferred to the contributor’s RRSP account, tax-free. If the RESP account is closed the funds in the account that were deposited by the contributor can be withdrawn without penalties. The gains earned inside the account are subject to tax.