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What Are the Advantages of the RESP As a Savings Vehicle?

OUR ANSWER

RESP, RRSP, investments, TFSA, piggy banks… there are many ways to save, each offering their own advantages. But when it comes to education savings, the RESP is far more interesting than other savings vehicles. Here’s why.

Generous Government Grants

 

The main perk of the RESP is the government grants. You don’t contribute to your RESP alone: the Canadian and Quebec governments also chip in. For example, in Quebec, you receive a minimum of 30% of your contributions1 in grant money. The boost these generous grants give your investment is hard to beat!

For each dollar contributed to your RESP (up to $2,500 per year), the Canadian Government pays the 20% Canada Education Savings Grant (CESG) and, if you’re a Quebec resident, the Quebec Government pays the 10% Quebec Education Savings Incentive (QESI)1. So, if you contribute $1,000 to your RESP, you’ll receive $300 in grants for your beneficiary.

Low- and middle-income families are eligible for additional amounts on the first $500 contributed. These amounts range between 10% and 20% for the CESG and 5% to 10% for the QESI (Quebec only)1.

Another grant, the Canada Learning Bond (CLB), is paid to beneficiaries from lower-income families. Upon opening an RESP, subscribers receive $500, whether or not they contribute, and $100 every year until the child’s 15th birthday2. This grant has a lifetime limit of $2,000.   

In total, the government grants can amount to $12,800 in Quebec and $9,200 in New Brunswick3. All this extra money will add up until your child enrolls in post-secondary education.  

About Taxes

The sums you invest in your RESP as well as the government grants generate earnings. Another perk of the RESP is that, contrarily to other investment vehicles, it allows this money to grow tax-free.

Once beneficiaries enroll in post-secondary education, they receive Educational Assistance Payments (EAPs), which consist of the government grants and investment income (earned on grants and contributions). EAPs are taxed in the beneficiaries’ hands, but since students generally have a low income, they pay little or no tax on these amounts4.

As the subscriber, you get back 100% of your contributions5 tax-free. If you wish, part or all of your savings can be paid to your beneficiary.

Why Kaleido

Kaleido is a partner of choice for your education savings project: the RESP is our area of expertise and we do our utmost to support families. We will help you find the best RESP for you and provide advice during the many years to come so you can get the most of your investment. For instance, we make sure that our clients receive all the grants to which their beneficiaries are entitled and keep them informed of the opportunities to maximize these amounts. In short, we work for you!

Stepping Stone Program: Your RESP Comes With Family Coaching  

At Kaleido, our priority is to give your child the means to pursue a post-secondary education, but we also strive to support your family in everyday life. We know children sometimes experience difficulties, both at school and at home. That’s why we offer our subscribers six hours of family coaching every year. The Stepping Stone Program is an exclusive advantage for families who open an RESP with Kaleido. Sleep disorders, learning disorders, ADHD, stress, sleep routine: get advice from a professional team in the field of education and acquire the tools to support your child through any type of difficulties. 

An RESP with Kaleido gives you access to expert advice and peace of mind knowing your investment will grow safely.

Legal Notes

* Our lawyers insist that we mention the identities marked with an asterisk are fictitious and only serve to present the most frequently asked questions. We understand your concerns well, so we took the lead. The answers, for their part, are all very real.

1. Canada Education Savings Grant (CESG) from 20% to 40%. Based on adjusted family net income. Quebec Education Savings Incentive (QESI) from 10% to 20% (available in Quebec only). Based on adjusted family net income. Certain conditions apply; see our prospectus.

2. CLB: The Canada Learning Bond is up to $2,000 per beneficiary and is offered for children born after December 31, 2003, from families who meet the financial criteria. Certain conditions apply. See our prospectus.

3. Canada Education Savings Grant (CESG) from 20% to 40% and Quebec Education Savings Incentive (QESI) from 10% to 20% (available in Quebec only). Based on adjusted family net income. The annual limit for the CESG is set at $600 and at $300 for the QESI. The lifetime limit for the CESG is set at $7,200 per beneficiary at $3,600 for the QESI. The Canada Learning Bond (CLB) is up to $2,000 per beneficiary and is offered for children born after December 31, 2003, from families who meet the financial criteria. Certain conditions apply. See our prospectus.

4. See which post-secondary programs are eligible in our prospectus. Certain conditions apply. Subject to the withdrawal limits established under the Income Tax Act (Canada).

5. Savings invested in T-Bills and government bonds. Under the REFLEX Plan and the UNIVERSITAS Plan, the refund of contributions at plan maturity includes an amount equal to the sales charges of $200 per unit. Under the INDIVIDUAL Plan, the sales charges of up to $200 are not refunded. Certain conditions apply; see our prospectus.