RESP-related grants are financial incentives offered by the Government of Canada and some provincial governments to encourage education savings. There are two types of federal grants: the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB). Here is a summary of these grants:
- The CESG is a basic grant corresponding to 20% of annual contributions made to an RESP, up to a maximum of $500 per year and $7,200 per lifetime per beneficiary¹. There is also an Additional CESG varying based on adjusted net family income, which can reach 10% or 20% of annual contributions, up to a maximum of $100 per year¹. The CESG is available to beneficiaries under 18 who are Canadian residents.
- The CLB is a $500 grant offered to children born after December 31, 2003, whose family receives the National Child Benefit Supplement. The CLB can be paid until the child reaches age 15 or up to $2,000. The CLB requires no RESP contribution, but one must be opened to benefit from it.
- In addition to federal grants, some provinces also offer grants for education savings. For example, Quebec offers the Quebec Education Savings Incentive (QESI), which corresponds to 10% of annual contributions made to an RESP, up to a maximum of $250 per year and $3,600 per lifetime per beneficiary. An additional QESI varying from 5% to 10% is also offered based on net family income. The QESI is available to beneficiaries who are Quebec residents at the time of contribution and are under 18.
To apply for RESP-related grants, you must contact your financial institution (the promoter) which will take care of necessary steps with competent authorities. Grants will be deposited directly into the child's RESP and can be used to finance their post-secondary studies in the form of Educational Assistance Payments (EAPs). EAPs are taxable in the hands of the student, who generally benefits from a low tax rate.
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