RESP – You have kids and being a responsible parent you want a good education for them. But paying that high amount of school fees makes you worried? Yes, loans and scholarships are an option but its not available to everyone. Moreover, with high loans its stressful for the kids to study and work at the same time if they have enrolled in courses that need a big commitment and lots of time. Let us see how you can help them.
RESP is the most widely used education savings tool in Canada. The RESP is administered by Employment and Social Development Canada (ESDC). ESDC is represented by Service Canada, which has a robust physical and online presence and is a valuable source of information about most Federal government programs. CRA also has a hand in RESP administration, given that the program features some tax benefits, and that there is some connection between income and grants and bonds.
The child is the beneficiary of RESP, and must a resident of Canada with a valid Social Insurance Number. There is no minimum or maximum age. The subscriber of the plan is typically a parent or grandparent. Curiously, it is also possible for the estate of the deceased to act as the subscriber of an already established RESP, even though a trust (which the estate is) cannot normally act as a plan subscriber.
- Contributions to an RESP are not tax-deductible.
- Growth in the plan is tax-deferred.
- You can get up to 40% grants on RESP
- Based on the income, Canada learning bond is also available up to $2,000
Funds withdrawn from the plan are taxable, only to the extent that those funds represent a withdrawal of dollars that have not yet been taxed. (Contributions are not taxable when withdrawn.)