Government grants and bonds

The federal government makes contributions to your child’s RESP through its grant programs: the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB).

If you live in Quebec or Saskatchewan, your child may be eligible for additional grant money under the Quebec Education Savings Incentive or the Saskatchewan Advantage Grant for Education Savings.

Adult beneficiaries are not eligible for government grants.

Canada Education Savings Grant

Your child will qualify for the CESG until the end of the year they turn 17. The lifetime limit for the grant is $7,200 for each child. If your child doesn’t continue with their education after high school, you can’t keep any of the grant money. You must return it to the government.

However, you can transfer money between individual RESPs for siblings without any tax penalties and without having to repay any CESGs. This applies to transfers that take place after 2010. The child who benefits must have been under 21 years old when the plan was opened.

Basic CESG

Each year, the government will match your contribution by 20%, up to a maximum of $500 for each child. You need to contribute $2,500 a year to get the full grant of $500 each year. Your child can carry forward unused grant contribution room until they turn 17.

Additional CESG

Depending on your income, the government may top up your contribution by an extra 10% or 20% on the first $500 of annual RESP contributions made on or after January 1, 2005.

If your net family income in 2016 is:

  • $45,282 or less – you could receive up to $100 extra (20%) in grant money on the first $500 you contribute,
  • between $45,282 and $90,563 – you could receive up to $50 (10%) extra in grant money on the first $500 you contribute.

If your child is between age 15 and 17

Special rules apply to beneficiaries between the ages of 15 and 17. By December 31 of the year a beneficiary turns 15, RESP contributions must:

  • total at least $2,000 or
  • have been at least $100 in any 4 previous years (they don’t have to be consecutive years).

2016 CESG amounts

Example – Total RESPRESP See Registered Education Savings Plan.+ read full definition contributions of $500 in 2016

Net family income Basic CESG amount Additional CESG amount Total CESG amount
$45,282 or less $100 $100 $200
Between $45,282 and $90,563 $100 $50 $150
$90,563 and over $100 0 $100

Example – Total RESP contributions of $2,500 in 2016

Net family income Basic CESG amount Additional CESG amount Total CESG amount
$45,282 or less $500 $100 $600
Between $45,282 and $90,563 $500 $50 $550
$90,563 and over $500 0 $500

Canada Learning Bond

The CLB provides an additional $2,000 per child to help families with modest incomes save in an RESP.

To qualify:

  • Your family income in 2016 must be less than $45,282 a year.
  • Your child must be born after December 31, 2003.
  • Your family must receive the National Child BenefitNational child benefit A government imitative that makes monthly payments to low-income families with children. Also provides other benefits and services to meet the needs of families with children.+ read full definition under the Canada Child Tax Benefit (also known as family allowance).

You don’t have to make any contributions to the RESP to qualify.

If your child doesn’t qualify for the bondBond A kind of loan you make to the government or a company. They use the money to run their operations. In turn, you get back a set amount of interest once or twice a year. If you hold bonds until the maturity date, you will get all your money back as well. If you sell…+ read full definition when you open the RESP, you can apply later if your circumstances change.

Amount of bond:

  • $500 for your child at birth and an extra $25 to cover the costs of opening an RESP, and
  • $100 for each year your family gets the National Child BenefitBenefit Money, goods, or services that you get from your workplace or from a government program such as the Canada Pension Plan.+ read full definition until your child turns 15.

Watch this video to learn more about how CESGs work.

Key point

The maximum you can receive per child is:

  • CESG – $7,200
  • CLB – $2,000

Caution

You have 60 days to cancel plans provided by scholarship planScholarship plan A type of Registered Education Savings Plan (RESP) that pools together the money of many investors. An investment manager invests the money for you, often in lower-risk, fixed-income investments such as bonds and GICs. Enrolment fees are often high and there may be strict rules.+ read full definition dealers without any penalty. Be sure to read and understand the rules outlined in the short Plan Summary provided in the plan prospectusProspectus A legal document that sets out the full, true and plain facts you need to know about a security. Contains information about the company or mutual fund selling the security, its management, products or services, plans and business risks.+ read full definition.

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