This post is part of the Big RESP Series. See the entire series here.
See the previous post on RESP contributions here.
These rules are valid as of 2008.
Most of the additional grants are income based so the family income has to be below certain amounts. These grants would be on top of the regular grants which were outlined in the resp contributions post.
Additional CESG – if caregiver income is equal to or less than $37,178 – grant is 20% of the first $500 of basic CESG per year for a maximum grant amount is $100 per year. $7200 lifetime limit of CESG still applies.
If caregiver income is greater than $37,178 and no more than $74,357- grant is 10% of the first $500 of basic CESG per year for a maximum grant amount is $50 per year. $7200 lifetime limit of CESG still applies.
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 PCG is eligible to receive NCBS – National Child Benefit Supplement – this supplement is generally for families with a net annual income below $37,178.
Alberta Centennial Education Savings Grant (ACES) – no contribution required – $500 initial one time – 3 subsequent payments of $100 payable at ages 8,11,14 – keep in mind that for these grants 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.
For these 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.
See the next post on RESP withdrawals.
{ 3 trackbacks }
{ 10 comments… read them below or add one }
Which does not make sens with their program is that people that have a family income below 37K will not likely put money aside for their kids. They have barely enough to eat!
So the government is offering additional contribution that will never be make. What a great political program
Good point FB.
One of the posts in this will outline my suggestion for a better RESP system.
Mike
Question on your example:
If the 10% grant is only on the first $500 of Basic CESG per year, then shouldn’t the additional grant be $50?
Thanks for the great information in this series!
Daniel – errr…yes -you are correct!
Thanks for catching that – I’ve changed the example.
At least I got the rule correct!
Hi Mike,
I contacted RBC Direct my financial institution and they told me I can not get the Canada Learning Bond for my two kids, because RBC Direct has not got that benefit registered. Does it mean that depending on the institution you get these additional grants.
Lou, that is correct. Not all financial instituations offer all the different types of grants.
You will have to find another institution that does offer those grants and set up an account with them.
What about the Quebec Gov’t grant:
(From Morningstar) “More recently, for residents of Quebec, a refundable tax credit known as the Quebec Education Savings Grant was introduced in 2007 as a complement to the CESG. The Quebec grant offers a maximum annual amount of $250 (with an additional $50 for middle-income and low-income families) and a maximum lifetime grant of $3,600 — or 50% of the CESG — and is payable for any RESP contribution made since February 21, 2007.”
http://www.revenu.gouv.qc.ca/eng/ministere/centre_information/nf/nf2007/in-136_76/credit_epargne_etudes.asp
Yes, good point Daliss – I need to update the post for the Quebec grant.
Hello. I have 3 children, 15, turning 17 and an 18year old.
I am divorced and we had to liquify our RESP 12 years ago.
Since then their father had passed and left a little insurance money.
Is there anything that would be worthwhile in investing into the
RESP now and can it be backdated?? Any suggestions?
Looks like all 3 will be going to post secondary…2 university for
sure.
Help!
Hi Donna – I answered your question in a post.
http://www.moneysmartsblog.com/2009/04/15/resp-contributions-and-a-reader-question/