Great Canadian Icons: Hockey, the Canoe and the RESP.
You might be surprised to learn that Registered Education Savings Plans (RESPs) are unique to Canada. No other country in the world offers the combination of tax-sheltered growth and government grants provided by RESPs. They are an expression of Canada’s national commitment to empowering all Canadian students to reach for their dreams and live rewarding, independent lives through higher education. At Knowledge First Financial, we believe that all Canadians should be proud of our country and the RESP.
We’re ranked 1st for citizens with post-secondary education.
RESPs are part of a tradition that has helped Canada become one of the most educated countries in the world, according to the Organisation for Economic Co-operation and Development (OECD). In fact, Canada is ranked 1st worldwide for the number of people in the country with post-secondary education.
Higher education can improve employment prospects and encourage growth in business, research, entrepreneurship, the arts and education, helping keep our country strong.
Why is the RESP worth celebrating, especially on Canada Day?
Other countries offer tax shelters, but not grants, to families saving for education. Others offer grants but not tax sheltered growth. Only Canada has developed an opportunity that offers both of these benefits to students – the mighty RESP.
Government Grants are an investment in each child’s future, and the future of our country.
The Government of Canada gives each student up to $7,200 through the Canada Education Saving Grant (CESG), to help pay for post-secondary education. Additional money is also available through some provincial government programs, notably Quebec and British Columbia.
The only requirement is that parents and other contributors be disciplined savers by opening RESPs for their children and contributing to it. It’s a partnership between Canadian families and the government with powerful benefits.
Where can your child’s RESP take them?
The sky is almost the limit: RESP savings can be used to help pay for education at any of the almost 100 publicly funded universities and 130 colleges and institutes in Canada, as well as private and public accredited educational institutions in Canada and the world over.
The future is brighter for Canadians with an RESP.
At Knowledge First Financial, we know that RESPs make a huge difference to students. Not only does an RESP ease the financial burden of rising tuition, it empowers students to focus on their studies, helping unlock the potential that education can bring.
The financial ABCs of RESPs
Here are the financial benefits of opening an RESP and starting to save when your child is young:
- Compound growth: As soon as your child is born, you can open an RESP and start saving – up to $50,000 for each child. Contribute early, regularly, and within your budget, and your savings will benefit from the snowball effect of compound growth.
- Tax savings: Your RESP contributions grow tax-free. When it’s time to withdraw funds for post-secondary education, the funds are taxed in the student’s name. Since most students earn little or no income, this means that there could be little or no tax owing on RESP earnings.
- Grants: All Canadians are eligible to access up to $7,200 in government grant money through the CESG. Depending on where you live, you may also take advantage of additional grant money through provincial education savings
- Canada Learning Bonds (if you qualify). Canadians who qualify for the National Child Benefit Supplement can also qualify for a Canada Learning Bonds, which provides a $500 initial grant to an eligible child’s RESP, and $100 per year until age 15, for a total of $2,000 per lifetime per child. For families eligible for the CLB, no financial contributions are requirement.
Happy Canada Day! Let’s all celebrate living in a country that values education.