A Registered Education Savings Plan (RESP) is one of the most generous savings tools available to Canadian families, mainly because the federal government adds free money to what you contribute. Yet many parents either open an RESP late or never claim the full grant. This guide explains how an RESP works, how to get the Canada Education Savings Grant (CESG) and the Canada Learning Bond, what the limits are and how money comes out when your child goes to school.
What is an RESP?
An RESP is a registered account that helps you save for a child’s education after high school. Contributions are not tax-deductible, but investment growth inside the plan is tax-sheltered until it is withdrawn. When the student takes money out for school, the grants and investment income are taxed in the student’s hands, and students often have little or no taxable income, so they may pay little or no tax.
There are three main types of RESP:
- Individual plan: one beneficiary, who does not have to be related to you.
- Family plan: one or more beneficiaries related to you by blood or adoption, useful when you have several children.
- Group plan: offered by group plan dealers, with contributions pooled with other investors. Rules and fees can be stricter, so read the terms carefully.
The Canada Education Savings Grant (CESG)
The CESG is the main reason to open an RESP. The federal government adds 20% on the first $2,500 you contribute each year for a beneficiary, which is up to $500 per year. The lifetime maximum CESG per child is $7,200.
If you miss years, unused grant room carries forward. You can catch up, but the basic CESG paid in any one year is limited to $1,000, which corresponds to contributing $5,000 in that year. That is why starting early matters: it is hard to collect the full $7,200 if you begin when your child is already a teenager.
Additional CESG for low and middle incomes
Families with lower or middle net incomes may receive an extra grant on the first $500 contributed each year, on top of the basic 20%. The rate depends on family income. Your RESP provider applies for it when you open the plan and provide the required information.
Age rules to watch
The CESG can be paid until the end of the calendar year the beneficiary turns 17. However, there are special rules for children aged 16 and 17: grants are only available in those years if certain minimum contributions were made before the end of the year the child turned 15. Check the details with your provider if you are starting late.
The Canada Learning Bond (CLB)
The Canada Learning Bond helps children from low-income families start saving for education, and it does not require any contribution from you. Eligible children born in 2004 or later can receive $500 in the first year and $100 for each additional eligible year, up to age 15, for a maximum of $2,000. You just need to open an RESP and apply. Full eligibility rules are on the Government of Canada’s education savings page.
RESP limits and key numbers
| Item | Amount or rule |
|---|---|
| Lifetime contribution limit per beneficiary | $50,000 |
| Basic CESG | 20% on the first $2,500 per year, up to $500 |
| Lifetime CESG maximum | $7,200 per beneficiary |
| Canada Learning Bond maximum | $2,000 (no contribution needed) |
| Maximum life of a plan | Generally 35 years after it is opened |
Some provinces have had their own programs as well. For example, Quebec residents may also receive the Quebec Education Savings Incentive through their RESP. Ask your provider which provincial incentives apply where you live.
How to open an RESP
- Get a Social Insurance Number (SIN) for your child: the beneficiary needs a SIN before grants can be paid, and so does the subscriber.
- Choose a provider: banks, credit unions, online brokerages and group plan dealers all offer RESPs. Compare fees and investment choices.
- Ask the provider to apply for grants: confirm that the CESG, any additional CESG and the CLB are requested.
- Set up automatic contributions: about $208 a month adds up to $2,500 a year, the amount that maximizes the basic grant.
Be careful with unsolicited calls or messages offering RESP deals or grants. Legitimate providers do not pressure you, and our guide on how to recognize phishing emails and texts explains the warning signs.
Withdrawing money from an RESP
When your child enrols in a qualifying post-secondary program, such as university, college, a trade school or another eligible program at a designated institution, you can request two types of withdrawals:
- Educational Assistance Payments (EAPs): the grants and investment growth, taxed as the student’s income.
- Return of contributions: the money you put in, which comes back tax-free.
Not every course is eligible, so confirm with your provider before enrolling. Many young people now look at shorter tech programs and online courses as well as traditional degrees. If your child is weighing those options, FocusCourses, a guide to tech courses and bootcamps in Canada, compares formats and costs, but always check whether a specific program qualifies for EAPs.
What if your child doesn’t go to school?
You have options. You may be able to transfer the money to a sibling in a family plan, keep the plan open in case the child enrols later, or transfer investment income to your RRSP if you have room and meet the conditions. Grants that are not used for education generally must be repaid to the government, and investment income withdrawn for other purposes may be taxed with an additional penalty tax. To understand how RRSPs fit in, see our TFSA vs RRSP guide.
RESP FAQ
How much should I put in an RESP each year?
Contributing $2,500 per child per year captures the maximum basic CESG of $500. You can contribute more, up to the $50,000 lifetime limit, but no extra grant is paid above that annual amount.
Can grandparents open an RESP?
Yes. Anyone can open an individual RESP for a child, including grandparents, as long as the beneficiary has a SIN.
Is the Canada Learning Bond really free?
Yes. Eligible children can receive up to $2,000 without any contribution. You only need to open an RESP and apply.
What happens to the CESG if my child doesn’t pursue education?
Unused grants generally have to be returned to the government, while your own contributions come back to you without tax.