Registered Education Savings Plan (RESP)

An RESP is a registered account designed to help Canadians save for a child’s education after high school. The money you put in isn’t tax-deductible, but it grows tax-sheltered inside the account. When the student withdraws funds for school, the growth is taxed in their hands, and since most students have little income, they usually pay very little or no tax at all.

The government grant

The biggest advantage of an RESP is the Canada Education Savings Grant (CESG). The federal government matches 20% of your contributions each year, up to $500 per year per child (based on $2,500 in contributions). Over time, that can add up to $7,200 in free money per child. Lower-income families may qualify for additional grants on top of that.

There’s a lifetime contribution limit of $50,000 per child, but there’s no annual limit. You can contribute a lump sum if you like, though the CESG only applies to the first $2,500 per year (or $5,000 if you have unused grant room from a previous year).

Why it matters

The CESG is essentially a guaranteed 20% return on the first $2,500 you contribute each year. That’s hard to beat. If you have kids and can afford to set aside even a small amount regularly, this is one of the most efficient ways to save for their education. The money can be used for tuition, books, housing, and other education-related expenses at colleges, universities, and many trade programs. Our RESP guide covers the full details.