The RESP: Free Government Money for Your Child's Education

A Registered Education Savings Plan (RESP) is a tax-sheltered savings account designed to help Canadians save for a child's post-secondary education. Money grows tax-sheltered inside the account, and the federal government adds grants on top — essentially free money just for contributing. When your child withdraws the funds for school, the growth and grants are taxed in their hands (usually at a very low rate, since students typically earn little income).

You can open an RESP for any child who is a Canadian resident with a Social Insurance Number (SIN) — your own child, grandchild, niece or nephew, or even a friend's child. There is no annual contribution limit, but the lifetime contribution limit is $50,000 per beneficiary across all RESPs. Contributions are not tax-deductible (unlike an RRSP), but the growth is tax-sheltered until withdrawn.

RESP benefits include tax-sheltered growth and education savings incentives. CESG depends on eligible contributions, while the Canada Learning Bond does not require personal contributions. Eligibility and provider support differ between programs.

Canada Education Savings Grant (CESG) — Eligibility Rules Apply

• Basic CESG: 20% on the first $2,500 contributed per year = up to $500/year per child.
• Lifetime maximum: $7,200 per beneficiary across all RESPs.
• Additional CESG for lower-income families: An extra 10% or 20% on the first $500 contributed, worth up to $100/year. Families with adjusted net income of $58,523 or less (2026) get an extra 20%; those up to $117,045 get an extra 10%.
• Unused CESG room carries forward: If you contribute less than $2,500 in a year, you can catch up in future years — up to $1,000 of basic CESG can be paid in one year when enough unused room exists. Additional CESG is separate and does not carry forward.
• CESG eligibility ends after the calendar year the beneficiary turns 17. Special prior-contribution conditions apply at ages 16 and 17; confirm these before starting late.

Canada Learning Bond (CLB) — For Lower-Income Families

• For eligible children, an initial $500 plus $100 for each subsequent eligible year through age 15. The provider must request the benefit.
• No RESP contributions are required to receive the CLB — it's free money just for opening the account.
• Lifetime maximum: $2,000 per child.
• Eligibility depends on adjusted family income and the number of children. Check the applicable benefit year and ensure required tax returns are filed.
• The child must have been born on or after January 1, 2004.

Provincial Grants (Additional Free Money in Some Provinces)

There are three types of RESPs, and choosing the right one matters — especially if you're considering opening one at a bank, credit union, or independent dealer.

For an eligible beneficiary with available grant room, $2,500 in annual contributions earns $500 in basic CESG. Fourteen annual contributions total $35,000 and earn $7,000 in basic grants. This is an illustration, not a requirement to contribute beyond your budget.

You don't have to contribute $2,500 in one shot. Many families automate a monthly contribution of about $208/month to hit the $2,500 target by year-end. You can adjust or pause contributions at any time with a self-directed RESP.

• To max the CESG each year: contribute $2,500 per year per child (any time before December 31).
• There is no annual contribution limit — you can contribute more than $2,500, basic CESG normally applies to the first $2,500, or more when unused grant room is available.
• Unused CESG grant room carries forward. If you contributed $0 in a year, you carry forward $2,500 of grant-eligible room. The catch: basic CESG is limited to $1,000 per year with sufficient carry-forward room, generally covering the current year plus one missed year. Additional CESG does not carry forward.
• The lifetime contribution limit is $50,000 per beneficiary across all RESPs. Over-contributions attract a 1% monthly penalty tax on the excess.
• Contributions can be made until the end of the 31st year after the RESP was opened. Grants stop at the end of the year the beneficiary turns 17 (and 15 for the CLB).

An RESP is an account, not an investment. Available holdings depend on the provider and qualified-investment rules. Compare savings deposits, GICs, funds and other eligible investments according to when the money will be needed and the losses you could absorb.

Recommended Approach: Age-Based Investing

1. 1Early years: consider your time horizon, risk tolerance and ability to absorb losses. Diversified investments may suit a long horizon, but growth is not guaranteed.
2. 2As school approaches: reassess the investment mix and how much you need for the first withdrawals. Fund names do not establish a particular stock/bond allocation; check current holdings.
3. 3Near withdrawals: consider cash or suitable maturing GICs for planned expenses. Bond funds can lose value and are not equivalent to guaranteed deposits.

Compare current account, management, fund, trading and transfer fees. Check which federal and provincial incentives each provider administers and whether its investment options and contribution rules suit you.

When your child starts qualifying post-secondary education — university, college, trade school, or many other programs — they can start receiving payments from the RESP. There are two types of withdrawals, and understanding the difference matters for tax planning.

Educational Assistance Payments (EAPs)

EAPs consist of eligible government incentives and investment income. They are taxable to the student, whose other income and federal and provincial credits determine the tax owing. The RESP provider issues the relevant tax slip.

Refund of Contributions

Original contributions are generally returned tax-free because they were made with after-tax money. Withdrawing them before the beneficiary qualifies for education payments can trigger grant repayment. Check the plan terms and ask the provider how each withdrawal will be classified.

If the beneficiary does not attend qualifying education, ask the provider about the following options and their conditions:

1. 1Ask about changing beneficiaries or transferring to a sibling RESP. Relationship, age and grant rules can affect repayment and overcontributions; transfers are not always penalty-free.
2. 2Keep the plan open within its permitted lifespan if education may happen later. Ask the provider for the closing deadline and any disability-related extensions.
3. 3A qualifying transfer of accumulated income to a retirement plan may reduce tax, subject to subscriber eligibility, deduction room and statutory limits. Check the conditions with the provider before closing the RESP.
4. 4If eligible for an AIP, earnings may be paid to the subscriber with regular and additional tax. Ask about eligible transfers and tax relief before requesting payment.
5. 5Repay the grants — government grants (CESG, CLB) must be repaid if the RESP closes without qualifying education. Refunded contributions are generally tax-free, but losses and fees can reduce what remains.

Eligible education extends beyond university, but not every course qualifies. Confirm the institution and program with the RESP provider. Transfers and accumulated income payments have conditions and are not automatic fallbacks.

Opening times and documentation vary by provider. Check account fees, grant support and the contract before applying.

1. 1Get the child's SIN — apply online at Service Canada. You'll need their birth certificate. Apply as soon as possible after birth.
2. 2Gather your own SIN and personal information.
3. 3Compare current providers, fees, investment choices and support for CESG, CLB and any applicable provincial incentive.
4. 4Apply for government grants — most RESP providers automatically submit CESG applications on your behalf when you open the account. Check with your provider to confirm.
5. 5If in BC, ask a participating provider to confirm the BCTESG application window and residency requirements.
6. 6Set up automatic monthly contributions — even $50/month is a meaningful start. Increase over time as your income grows.
7. 7Review your investment selection annually and shift to a more conservative allocation as the child approaches school age.