RESP – Additional Grants Eligibility And Canada Learning Bond (CLB) For Lower Incomes

by Mike Holman

The regular RESP grants (CESGs), calculated at 20% of contributions, are available to all eligible Canadians regardless of their individual or family income. It doesn’t matter whether you earn $20 a year or $2,000,000 a year – you still qualify for the basic RESP grants.
Besides the 20% basic grant, the government offers additional grants based on family income.
There are a large number of middle (and lower) income Canadians who are eligible for these additional grants – and probably don’t know about it.

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The income levels for additional grants apply to the primary caregiver of the child and not the person who opens the account.

These additional RESP grants apply to the first $500 of contributions each year, unlike the normal RESP grants, which are payable on the first $2,500 of contributions per year.

There are two different income levels to qualify for these additional grants.

Families with a net income between $42,707 and $85,414 are eligible for an extra 10% grant on the first $500 of contributions each year for a total of $50 per year.

Families with a net income of $42,707 or less are eligible for an extra 20% grant on the first $500 of contributions each year for a total of $100 per year.

These income ranges are for 2012.  To get updated value for future years, please visit this CanLearn page.

The family income in this case refers to the primary caregiver, who might not necessarily be the subscriber or owner of the account.

Net income: This is the amount on Line 236 of your T1 general tax form. It is your income net of RRSP contributions, child care expenses etc.

Not all financial institutions offer additional grants, CLB or ACES grants.  Please check this list for verification.

Canada Learning Bond – no RESP contribution required . $500 initial one-time payment followed by $100 per year for 15 years – total potential of $2000.

Eligibility – If primary caregiver is eligible to receive NCBS – National Child Benefit Supplement – this supplement is generally for families with a net annual income below $42,707 .

Alberta Centennial Education Savings Grant (ACES) – No contribution required – $500 initial one time payment – 3 subsequent payments of $100 payable at ages 8,11,14.

You have to apply for the initial contribution within 6 years of the child being born and the subsequent contributions, 6 years after the birthdays. There is no income test for ACES grants.

Both the CLB and ACES grants do not require a contribution, so anyone who qualifies for them should take advantage of the program and get the grants. For the addition CESG grants, these require a normal RESP contribution to be made before getting the additional grant, so I would caution anyone who is in a lower income range to make sure that you have your own finances in order before contributing to an RESP.

Let’s look at an example!

Mary and Steve make a combined family income of $71,500 which makes them eligible for an extra 10% CESG grant on top of the regular 20% grant.

If they contribute $1000 in a year then they will get:

Normal CESG grant of 20% = $200.
Additional CESG grant of 10% on the first $500 of contribution = $50.

So the total CESG grant on their $1000 contribution will be $250.

More detailed RESP information

Check out the RESP rules page for a list of more detailed RESP articles on this site.

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