What are government grants?
The main reason RESPs are different from other registered or tax-deferred savings plans, such as Registered Retirement Savings Plans (RRSPs) and Tax-Free Savings Accounts (TFSAs), is because they give your child access to government grants.
The Canadian governments offer incentives to save towards post-secondary education in the form of federal and provincial grants. This includes the basic Canada Education Savings Grant (CESG) to any Canadian resident that opens an RESP. The government of Canada matches 20% of the first $2,500 you contribute to your child’s RESP each year, up to a lifetime maximum of $7,200 per child. That works out to an extra $500 paid directly into your child’s RESP every year. If your family’s income falls below a certain level, your child might qualify for another 10-20% on the first $500 contributed each year to your child’s RESP.
In addition to the CESG, depending on your province, your child may also be eligible for provincial grants. These include:
Quebec Education Savings Incentive (QESI) The government of Quebec offers the QESI, which is 10% on the first $2,500 contributed annually to an RESP by residents of Quebec, up to a lifetime maximum of $3,600 per child. If your family’s income falls below a certain level, your child might qualify for another 5% – 10% on the first $500 contributed each year to your child’s RESP.
British Columbia Training and Education Savings Grant (BCTESG) The government of British Columbia offers the BCTESG, a one-time $1,200 grant for BC resident children born on or after January 1st, 2006. You can apply for the BCTESG on your child’s sixth birthday until the day before your child’s ninth birthday.
Saskatchewan Advantage Grant for Education Savings (SAGES) The government of Saskatchewan offers SAGES, which is 10% of the first $2,500 contributed annually to an RESP by residents of Saskatchewan, up to a lifetime maximum of $4,500 per child. Although this grant has been temporarily suspended, the Saskatchewan Government recommends new plan holders to complete a SAGES application and submit it to their RESP promoter for consideration if SAGES is reinstated.