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

by Mike Holman

Welcome to Money Smarts! If you're new here, please read the "About" page to find out more about this site. If you would like to receive updates by email then sign up here or you can subscribe to the RSS feed. Thanks for visiting!

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.

RESP Book

Buy The RESP Book on Amazon

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.

Be Sociable, Share!

Want to learn more about RESPs? Buy The Book:

Resp-Book

The RESP Book: The Simple Guide to Registered Education Savings Plans

Everything you need to know about RESPs.

See it on Amazon now

Welcome to Money Smarts! If you're new here, please read the "About" page to find out more about this site. If you would like to receive updates by email then sign up here or you can subscribe to the RSS feed. Thanks for visiting!

{ 23 comments… read them below or add one }

1 TheFinancialBlogger

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 ;-)

2 Four Pillars

Good point FB.

One of the posts in this will outline my suggestion for a better RESP system.

Mike

3 Daniel

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!

4 Four Pillars

Daniel – errr…yes -you are correct!

Thanks for catching that – I’ve changed the example.

At least I got the rule correct! :)

5 Lou Jaramillo

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.

6 Four Pillars

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.

7 Daliss

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

8 Four Pillars

Yes, good point Daliss – I need to update the post for the Quebec grant.

9 Donna

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!

10 Four Pillars
11 Ram

My Daughter landed in Canada on Dec 25, 05. I opened Resp a/c in Oct 2008 and contributed $1400/- in that year. and after Jan 2009 I started to contiribute $200 pm.

However, I would like to contribute more so that I can avail maximum CESG grant. If any body knows please let me know in detail.

12 kenne tufe

Is it possible to have the french translation of all those information ?
Regards.

13 Janine

We qualify for the Canada Learning Bond, opened an account several years ago and haven’t received the CLB. I’ve asked my Financial Advisor about this and he doesn’t seem to be able to find out how we can get this.

Now I’m wondering if this institution can’t offer the CLB – it looks like not all of them do. What do I do to get this money? Open another account at another institution? We have been receiving the additional grants okay.

Thanks for you help.

14 Mike Holman

@Janine – from the list of grants offered by institution

http://www.hrsdc.gc.ca/eng/learning/education_savings/publicsection/new_promoter_list.shtml

It appears that every company which offers additional grants, also offers CLB.

If you are eligible for CLB, you should be getting it at your institution.

I would call your institution and ask. Also call the HRSDC RESP line and see if they can figure it out – they have access to your account. There are many reasons why you might not be getting the CLB.

HRSDC 1 888 276 3624

15 DT

I am interested in these additional grants for lower income families. We have RESP’s for our 2 daughters and receive the basic grant. I have 2 questions.
With a net family income of 50,000 we should be eligible for 10% extra. Do we have to apply for this or does it happen automatically?
You state the family income is that of the primary caregiver who may or may not be the subscriber. How is the primary caregiver determined?

Thanks for great info.

16 Mike Holman

@DT – You have to apply separately for the additional grants. I believe that most institutions will do this automatically (or they should) when you set up the account.

You can still apply – call your financial institution and ask them to do it. They have to fill out a form and submit to the government. You will have to sign it.

I believe the primary caregiver is the parent/parents who look after the kids.

17 Matthew

we lnded canada on aug 2011, open RESP at RBC toranto, rently moved permnetntly to alberata. my son is 2 yerals old. our annulal income is $60k, wish to know how can my son get CLB and ACES befits. he is geeting $100/month UCCB. do we need to submmit ay additional form? please advice thanks

18 judy vill

Hi, Thank you so much for this easy to read review. In 2005 I asked my bank about the additional grant and they told me there was nothing like that. Now I see I qualified for the extra 10% for the years 2005-2008 ($200 total), but revenue canada says I can only apply back 3 years so I cannot get this money now. Is there anything I can do???

19 Mike Holman

@Judy – I’m afraid you are out of luck.

You can try complaining to your bank, but I doubt that will get you anything.

20 judy vill

Well, it’s a good warning to others – always check twice. I will complain and see what happens. They might be helpful since I am transferring a large RRSP over and the hold my RESP. I’ll keep you posted :)

21 judy vill

Follow Up: CIBC has just credited my RESP $200 for that mistake! Miracle…. Now I am asking for my transfer fees to bring my RRSP’s over to be waived.

22 Mike Holman

Nice work Judy!

23 Sharon

From what I’ve seen, the CLB is available only to children born after 2003. Am I right in this, or have I misunderstood something.

Leave a Comment

Current ye@r *

Previous post:

Next post: