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 Calgary

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Funds withdrawn from the plan are taxable, only to the extent that those funds represent a withdrawal of dollars that have not yet been taxed. (Contributions are not taxable when withdrawn.)

There are 3 types of RESPs:

Family Plan

The plan can have multiple beneficiaries and must be related to each other by birth or adoption. The plan subscriber must be a parent (includes adoptive parents and step-parents) or grandparent of each beneficiary. Each beneficiary of a family plan must be under age 21 at the time the plan is established. Over the age of 31 contributions cannot be made.

Individual or Non-Family Plan

This plan has only one beneficiary. There is no requirement that subscribers and beneficiaries will be related to each other. You could also set up a non-family for yourself. Contributions into a non-family plan are not permitted after the 31st year of the plan’s existence.

Group RESP or Scholarship Plan

The biggest disadvantage of these plans is the feature of contractual obligations to participate and liquidity restrictions which are not there in individual plans. They are normally offered by companies that are in the business of selling RESPs, and they often have provisions that set them apart from other RESP plan.

The maximum amount of lifetime contributions to RESPs for one beneficiary is $50,000. It is possible to have more than one RESP, but this maximum applies to all RESPs cumulatively. In the case of a family plan with multiple beneficiaries, no more than $50,000 of contributions per beneficiary is allowed. Anybody can contribute to the RESP; there are no attribution concerns.

As with the RRSP and TFSA, over contributions result in a 1% penalty tax per month on the amount over. As with the RRSP, a withdrawal can be made in the year of the over contribution to bring the RESP back onside.

The greatest appeal of the RESP is generally seen to be the grants and bonds; we will discuss those benefits later in.


It’s a registered retirement savings plan that can be used to enhance your income during retirement years and take advantage of tax deductions while working. To contribute to an RRSP, the contributor must have RRSP contribution room available. RRSP contribution room is based on the contributor’s deduction limit, which is calculated each year based on earned income. It could be Net employment income, Unemployment benefits other than EI, Net rental income, Taxable support payments, Grants, Royalty income, and CPP disability benefit income. The contribution room is 18% of the total earned income. Unused RRSP room can be carried forward indefinitely. A taxpayer who has $10,000 in unused RRSP deduction limits from previous years and a new RRSP deduction limit of $16,000 for the current year would be able to contribute $26,000 in the following year and deduct that full amount from that year’s taxable income. The over contribution allowance is $2000. The taxpayer does not simply contribute funds to their RRSP and be done with it. The RRSP is only a tax measure to encourage investing. The taxpayer will select an investment (or investments) which the financial institution in question will then register with CRA.

A great variety of investments are available within the RRSP.
You can invest in stocks, ETFs, Bonds, Currency exchange, Annuities, GICs, Call/put options, Mutual funds, segregated funds, investment-grade gold or silver; the taxpayer can contribute to his RRSP up until December 31st of the year that the taxpayer turns 71. After that, no further contributions to the taxpayer’s own RRSP are permitted.

A taxpayer can also contribute to the spouse’s (or Common-Law Partner’s) RRSP. This is generally only appropriate in circumstances where one spouse earns a relatively high income and the other earns a relatively low income. This allows the taxpayer to use his own deduction limit and obtain the tax deduction, but to put funds in the spouse’s RRSP. The attribution rules apply when the withdrawals from a spousal RRSP is done in a specific period. Withholding taxes apply to withdrawals. By naming just any beneficiary, the amount in the RRSP transfers directly to that person at death, and the annuitant’s terminal tax return incurs the tax liability. Effectively, this reduces the assets available in the estate to pay out to the heirs. Any amount paid as a result of a beneficiary designation is likely to bypass probate. RRSP is a great tool to use the Home buyer’s plan and Lifelong learning plan.


Unlike the RRSP, there are no spousal TFSA contributions. Any TFSA contribution must come from the TFSA holder. Also, there is no creditor protection of a TFSA. If the taxpayer is going to be in a higher tax bracket in retirement than while working, then the TFSA should be the vehicle of choice. If the tax bracket is going to be the same, then, mathematically, the TFSA and RRSP will work out the same. You could face some tax on your TFSA income where you have invested in a foreign stock inside your TFSA. Foreign dividends paying stocks will subject to foreign non-resident withholding tax. Many people are still not using the TFSA. For lower-income earners, it can be more effective as a retirement savings vehicle than the RRSP, as it will not cause a loss of GIS income in retirement. For higher-income earners, it can provide a flexible supplement to the RRSP. There is no OAS claw back from TFSA.

You can invest in stocks, bonds, mutual funds, segregated funds, GICs through the TFSA account.


For a business owner it’s a great tool to save funds for the retirement. It’s a form of defined benefit plan. As compared to RRSP the contribution room in an IPP is way higher so it allows you to save more and enhances your financial security in retirement. Its very well suited for a business owner aged 40+ and have had $100,000 of earnings in T4. It helps to reduce the passive income in corporation. The cost of the plan is tax deductible for the corporation. The plan provides credit protection benefit as well. The contribution room increases from 18% up to 65% when you save in IPP as compared to the RRSP.

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