RESP: Saving for Your Child's Education in Canada

What Is an RESP?

An RESP is a government-registered savings account where money grows tax-sheltered until the child uses it for post-secondary education. The key feature that sets it apart from other accounts is the government grants that go directly into the account on top of your contributions.

Any growth inside the RESP is not taxed while it sits in the account. When withdrawn for education, it is taxed in the student's hands — typically at a very low rate because students usually have little income.

The Canada Education Savings Grant (CESG)

This is the core reason the RESP is so compelling. The federal government automatically deposits a 20% grant on the first $2,500 you contribute per year, per child.

Maximum lifetime CESG: $7,200 per child.

For lower-income families:

• Family net income under ~$55,867 (2025): additional 20% on the first $500/year = extra $100/year
• Family net income ~$55,867–$111,733: additional 10% on the first $500/year = extra $50/year

The Canada Learning Bond (CLB): Free Money for Low-Income Families

The Canada Learning Bond is an additional grant requiring no personal contribution. It is available for children from lower-income families who receive the National Child Benefit Supplement (part of CCB for very low-income families).

• Initial payment: $500 in the year the RESP is opened
• Annual payments: $100/year for each year the family qualifies, up to age 15
• Maximum lifetime CLB: $2,000 per child

The CLB is automatic once the RESP is opened — no additional application is needed. This is the most underutilized education benefit in Canada: billions of dollars go unclaimed each year because low-income families have not opened an RESP.

Who Is Eligible?

To open an RESP and receive the CESG:

• The beneficiary (child) must be a Canadian resident under age 18 with a valid SIN
• The subscriber (parent/guardian) opens the account — they do not need to be a Canadian citizen or permanent resident, just a Canadian resident for tax purposes
• The child must remain a Canadian resident to receive ongoing grant payments

For newcomers: You can open an RESP as soon as your child has a SIN and you are both Canadian residents. There is no waiting period.

Important note on CESG and age: CESG is available up to December 31 of the year the child turns 17, but with restrictions after age 15. To maximize the grant, start early.

How Much Should You Contribute?

The minimum to maximize the annual CESG is $2,500/year (to get the full $500 grant). You can contribute more, but the CESG is only paid on the first $2,500.

Contribution limits:

• Lifetime contribution limit per beneficiary: $50,000
• No annual maximum, but only the first $2,500 attracts CESG each year
• Unused grant room carries forward — if you miss a year, you can contribute $5,000 the following year to catch up on one year of missed grants (but only one catch-up year at a time)

Suggested Approach

• Contribute $208/month ($2,500/year) to maximize the annual CESG
• If you can afford more, consider contributing up to $5,000/year to catch up on any missed years
• Even small, irregular contributions help — start with what you can

Where to Open an RESP

Major Banks

All major Canadian banks (TD, RBC, Scotiabank, BMO, CIBC) offer family or individual RESPs. Convenient if you already bank there, but fees and investment options vary.

Online Investment Platforms (Better Value)

• Questrade — Self-directed RESP with low-cost ETF investing
• Wealthsimple — Managed RESP (robo-advisor)
• RESP providers — Companies like Knowledge First Financial also offer group RESPs (read fees carefully)

What to Avoid

Group RESPs (scholarship plans) from companies like Knowledge First Financial have historically charged high fees, complicated rules, and restricted investment choices. The Competition Bureau of Canada has raised concerns about these plans. Individual or family RESPs at banks or investment platforms are generally preferable.

How the Money Is Used

When the child starts eligible post-secondary education (university, college, apprenticeship programs, trade schools, certain language schools), the RESP can be withdrawn as an Education Assistance Payment (EAP).

EAPs consist of:

• Government grants (CESG, CLB)
• Investment growth

EAPs are taxable in the student's hands, not the parent's. Since students typically have little income, the tax is often very low or zero.

Your original contributions are returned to you (the subscriber) tax-free.

If the child does not attend post-secondary education:

• Contributions are returned to you (tax-free)
• Grants must be returned to the government
• Growth can be transferred to your RRSP (up to $50,000 lifetime, if you have room) or withdrawn as income with an additional 20% penalty tax
• The account can stay open for 35 years — the child has time to decide