Got an RESP question from a friend of mine which might be of use to some people:
Hi Mike. I started RESP for 10-year old son last August 2012 – contributed $5000 down + set up automatic withdrawals for $200/month for August, September, October, November, December 2012 (5months x 200=$1000).
I rec’d a government grant for $1000 for the original $5000 lump sum I started with in August. I did not receive any grant for the additional monthly contributions which total $1000 for the remainder of 2012.
Will I get the government grant for this additional $1000 I contributed in 2012 this year? While I play catch-up (started when he was 10 years) I will only receive 20% grant on a total of $5000/year? Any additional contributions in that year will NOT receive the grant?
You are correct.
The maximum amount of regular RESP grants you can get in a calendar year is $1000, which you got on your original $5,000 RESP contribution in 2012. Any subsequent contributions made in 2012 will not get any grants in that year or any other year. Once 2013 rolled around, you can start up again and contribute up to $5,000 in 2013 and get the full grant. While contributing money to the RESP that wasn’t eligible for a grant wasn’t your intention, it’s not really a mistake. The extra $1,000 is in the account and is tax- sheltered which is a decent benefit in itself.