RESP

Registered Education Savings Plans (RESP)

RESPs are an excellent way to save for post-secondary education. For most flexibility, both spouses should set up a family plan.

Contributions to a RESP are not tax deductible but the investment income earned is tax sheltered. When the student uses the RESP for post-secondary education, the accumulated income and any grants received become taxable to the student. As the student typically does not have a very high income, there is usually little or no tax on this income.

The RESP receives a grant of 20% of the first $2,500 in contributions, up to $500 each year per beneficiary. You can double-up your contribution in any year for a missed year. The maximum total grant is $7,200 per student. An additional grant on the first $500 may be received if the family income is below $75K. The plan must be set up before the end of the year that the child turns 15.

Additional information (CRA) (http://www.cra-arc.gc.ca/E/pub/tg/rc4092/rc4092-e.html)