The main source of federal government support is the Canada Education Savings Grant (CESG). Currently, the basic CESG is a 20% matching grant of up to $500 annually, to a lifetime maximum of $7,200. While it is ideal to start contributing to an RESP as early as possible to take advantage of the CESG, not to mention the compounded growth, that grant room accumulates from the year in which a child is born. Unused basic CESG grant room is carried forward and can be applied against future contributions, subject to a maximum additional grant of $500 per year. In other words, if a $5,000 contribution is made to an RESP account, $1,000 in total CESG would be paid. This carryforward room must be claimed before the beneficiary turns 18 years of age.
Even if you get a late start on contributing to an RESP, children who are 16 or 17 years old may still qualify for the CESG. To be eligible, they must meet at least one of the following conditions before the end of the calendar year they turn 15:
- At least $2,000 has been contributed to the RESP
- A minimum annual contribution of $100 has been made to the RESP in any four previous years
In theory, if the cash is available, the full lifetime $50,000 contribution could be made in one year, but then only a maximum of $1,000 in CESG would be collected, and you would forego thousands of future government support money.
Depending on your income level, you may also be eligible for other federal support, including the Canada Learning Bond. In addition, some provinces offer educational supports. To find out more, please refer to the Government of Canada’s page on provincial education savings incentives.
Read more at the Government of Canada website.