RESP Contribution And Grant Rules For 2014

by Mike Holman

One of the main benefits of RESP accounts is the federal Canadian Educational Savings Grant (CESG). This grant is 20% of any eligible contributions in an RESP account.

How the RESP grant system works

Let’s say you open an RESP account for your bouncing new baby and contribute $1,000 into the account. Your financial institution will send the account and contribution information to the Canadian government for grant approval. If the grant is approved, the institution receives the grant money and deposits it into your account.

RESP Book

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The math

20% of the $1,000 contribution is $200, so you will now have an extra $200 in the account courtesy of the Canadian government. This basically gives you an extra 20% one-time return on your contribution.

Basic RESP contribution rules and numbers to know

  • $2,500 – Amount of annual grant-eligible contribution room accrued each year starting in 2007 or the year the child was born (whichever is later). The contribution room continues accruing up to and including the year when the child turns 17 years old. This amount is based on the calendar year and not the birth date.
  • $2,000 – Amount of annual grant-eligible contribution room accrued each year starting from the year the child was born or 1998 (whichever is later) up to and including 2006.
  • 20% – Amount of grant earned on an eligible contribution. For example: a $1,000 contribution would earn a grant of $200, if that contribution is eligible for a grant. There are additional grants available for lower income families.
  • $500 – Maximum amount of grant a beneficiary is eligible to receive for each calendar year from the year they were born or 1998 (whichever is later) to the year they turn 17 years old. This amount was only $400 for years prior to 2007.  A calendar year is from January 1st to December 31st.
  • $7,200 – Lifetime grant limit per beneficiary. If you contribute $2,500 every year, you will hit the maximum grant level in the fifteenth year, and no more grants will be paid to the beneficiary. This limit includes additional grants available to lower income families.
  • $50,000 – Lifetime contribution limit per beneficiary. Because there is no annual limit, you could potentially make one single contribution of $50,000 to an RESP if you choose.
  • Contribution room carry over. One of the great things about the RESP is that you can carry over unused contribution room into future years. However, there is a catch: Only one previous year’s worth of contributions can be used each year.
  • Contributions are not tax-deductible.  You won’t get a tax slip, and you can’t deduct RESP contributions from your taxable income.

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For example: If you start an account for your six-year-old child, you can contribute $2,500 (this year’s contribution room) plus another $2,500 (from previously unused contribution room) for a total of $5,000, to receive a grant of $1,000. You are allowed to contribute more than $5,000 in this scenario, but there will be no grant paid on the amount above $5,000. When calculating contribution room carryover from past years, don’t forget that the contribution limit was only $2,000 prior to 2007.

RESP contribution examples

Let’s do some examples to clarify exactly how this works.

Example 1 – Simplest example

Steve was born in 2010. His parents are broke, but one kindly grandmother decides to open an RESP account for him.

She opened the account in 2010 and has $2,500 of contribution room available. She contributes $1,500 to the account in 2010, so the RESP grant is $300 (20% of $1,500).

In 2011, she contributes $1,200, thereby qualifying for a $240 grant.

Example 2 – A more complicated example

Little Johnny was born in 2006. His parents decide in 2010 to set up an RESP account for him. They want to know how much money they can contribute each year to catch up on all the missed government grants.

Let’s add up the current contribution room.

2006 – $2,000 of contribution room

2007 – $2,500 (new rules)

2008 – $2,500

2009 – $2,500

2010 – $2,500

In 2010, the couple has $2,500 of contribution room for the current year plus $9,500 of contribution room from previous years.

Since the rule is that you can only contribute up to $2,500 of previously carried over contribution room each year in addition to the current contribution room, this means they can contribute this year’s amount ($2,500) and another $2,500 for a total of $5,000, which gives a grant of 20% or $1,000 for 2010. Since they only used $2,500 of their available $9,500 of carried over contribution room, they now have $7,000 in contribution room to carry over for the future.

  • In 2011, they can contribute another $5,000 for a $1,000 grant. $4,500 of contribution room is carried forward to the next year.
  • In 2012, they can contribute another $5,000 for a $1,000 grant. $2,000 of contribution room is carried forward to the next year.
  • In 2013, they can contribute only $4,500. $2,500 from the current year plus $2,000 they carried over from the past.
  • In 2014 and beyond, they can only contribute $2,500 each year and expect to receive the full grant of $500.

Summary of contributions they can make to get all the government grants:

  • 2010 – Contribute $5,000, receive $1,000 grant, $7,000 of unused contribution room
  • 2011 – Contribute $5,000, receive $1,000 grant, $4,500 of unused contribution room
  • 2012 – Contribute $5,000, receive $1,000 grant, $2,000 of unused contribution room
  • 2013 – Contribute $4,500, receive $900 grant, $0 of unused contribution room
  • 2014 and onward – Contribute $2,500, receive $500 grant

Please note there are special RESP contribution rules for 15, 16 and 17-year-olds.

RESP family plan contribution allocations

If you have a family plan with two or more beneficiaries, you need to allocate each contribution between the beneficiaries. For example, you might want to set up all contributions to be divided equally between the account beneficiaries. Or you might have a particular contribution that should be allocated to just one beneficiary. You must set the allocation so the government can track the grants for each child.

When you open an RESP account or add a new beneficiary to an existing account, you can set up the default allocation to split the contributions equally among the children on the account. If you want to make a contribution with a different allocation, you have to indicate this on the purchase order.

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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{ 174 comments… read them below or add one }

51 Ken

I have two children – 18 and 13 both have RESP’s — My 18 year old can no longer get grant money – but has some scholarship money $5,700 that I would like to get grant money on. The 13 year old has plenty of room is his RESP, so I’m wondering if I put this money into the 13 year olds RESP -will the 20% grant be paid into the 13 year olds fund? If so once it’s there can I then transfer the whole amount $6,840 into the 18 year olds RESP account?

Thanks in advance
Ken

52 Mike

Ken – I’m not 100% sure about this one but I don’t see why you can’t put the money in the 13 yr olds account and then transfer to the 18 year old.

I would check with the HRSDC as well as the institution where the accounts are held to make sure it’s ok.

I’m assuming the kids have individual accounts? You might have to put them into a family account to make this happen.
Another thing to remember is that there is a $7200 lifetime limit for grants. If the 18 year old has already received his limit then there is no point in doing this since the grants won’t be able to be transferred.

53 heather

My son is 17 this year 2009 and will be attending university sept 2010. We opened an family resp for both of our children in 2006 but have not made any contributions in the past 3 years. How much can we contribute this year and will grants be applied , if we contributed the maximum we are allowed.

thanks
Heather

54 Four Pillars

Heather – I’ll need more info.

How much did you contribute toward the 17 year olds resp in 2006 and 2007?

For these contributions – are you asking about both kids or just the older one?

55 heather

2000.00 each year for both children

56 Four Pillars

Ok – the rule is that if you haven’t contributed $2000 by the end of the year where the child turns 15 (2007 in the case of your son) then you can’t get any grants for that kid in subsequent years.

In your case it sounds like you met this condition so you should be ok to get more grants in your son’s account.

The highest grant amount you can get for this year is $1000 for your son. You will have to contribute $5000 to get this grant. You are allowed to contribute more than $5k but you won’t get any grant on that extra amount so it’s not worthwhile doing.

The same will apply to your daughter assuming she is younger.

57 Joseph

Hi,

I have been contributing to my son’s RESP account of $2,500/year in each of 2007 and 2008. I am going to contribute another $2,500 this month. My son is 16. He turns 17 on July 2010.
Question: Am I able to contribute another $2,500 in 2010 and be entitled to the grant? If so should the contribution be paid before his 17th birthday during July 2010?

58 Denise Sarkissian

Question: If the subscriber is the father can the contributions be taken out of the grandmothers account?

59 Four Pillars

Denise – You should be able to do this. My Mom has a regular contribution set up for my kids resp where the money comes out of her account. The subscribers of the account are my wife and I.

60 Momma14

Is there a minimum that must be contributed before the govt. gives that 20% grant? Or will it even be given on, say 50 dollars, if that is all that is contributed the first year. And when is the grant money paid. Yearly or monthly?

61 Mike

Hi Momma…I hope the “14” doesn’t refer to your age!

There is no minimum that I know of for the government, however most financial institutions might have their own minimums for purchases.

There isn’t a set schedule for grant money. Once the purchase is made the financial institution sends the info to the government, once the government approves it then the grant money is used for an additional purchase (20% of the original). I’m not sure how long the lag time is – maybe a month or so?

62 bbymom

Hi,

Your information above :
$2,500 ($2000 old rules) = Amount of grant-eligible contribution room which is eligible to receive a grant for each year from the year they are born or 1998 (whichever is later) to the year when they turn 18.

Is 17 or 18 the age which the child will receive the grant?
My child will turn 17 on 2011 and does that means she won’t be receiving any grant starting 2012?

I have been contributing to RESP for my child since 1995. I have not received any grant at all from 1995 – 1997 and I have used up all the contribution room each year since then. Is the grant available back in 1995 before 1998?

63 Four Pillars

bbymom – good catch. The year when the child turns 17 is the last year when they can receive a grant. I’ll correct the information in the post.

If your child turns 17 in 2011 then that is the last year they can get any grants. This is based on calendar year so it doesn’t matter when their exact birthday is. She can get grants right up to the end of 2011 even if she turns 17 on Jan 1.

The “grant room” only started accumulating in 1998 so there was no grant room available prior to 1998.

64 DK

I have a 13 year old child (year of birth 1996). I would like to contribute to RESP starting 2009. What is the maximum amount would I be able to contribute this year (2009) and in coming years to receive the maximum grant? Your comments will be appreciated.

65 Mike

DK, you can contribute $5k per year to get the maximum grant up to and including the year when he turns 17.

66 PC

I have 3 young children in 3 different family RESP accounts and I find myself already losing track of things. In order to determine how much I can contribute in total to take full advantage of the grant do I have to determine the contributions made so far and subtract this from my limit myself or can this info be provided by the government or financial institution?

67 IMRAN

I have opened RESP for my three children ( I have five in total ) with TD bank . Now I am thinking I make a mistake . I want to switch them to TD water House so that I can invest them in equities. Is it possible now? I am thinking OK. If some one advise me, I will be thankful.

68 HARVEY

I as grandfather subscriber am contributing to a Self Directed RESP for my 2 grandchildren. If I die before any of the funds are used by the grands does any part of the RESP become part of my estate?
Does my Executor become charged with making decisions re use of the RESP by the grandchildren, or does that fall to the parents? How does one designate responsibility for the Self Directed RESP after the subscriber’s death?

69 Four Pillars

Great question Harvey. I believe the resp account will be part of your estate and the ownership will be determined by your will. I’ve linked to an article which suggests that you specify in your will who will take over the account.

If you don’t do this then whoever inherits your estate will also inherit the account and they can do whatever they want with it (ie keep the money for themselves).

See this article for some good details:
http://rulelaw.blogspot.com/2008/01/estate-planning-and-registered.html

70 Dennies Santiago

Hi. I want to open an RESP for my 2 children. I’m in the high-income bracket for calendar year 2008 but I will be in the low-income bracket for calendar year 2009 since I went for schooling. If I will open RESP before I will file my tax this Feb.2010, will govt still rely on CY 2008 (high-income) and not CY2009 (low-income) and I will not receive Canada Learning Bond and 40% grant? Should you advice that I open my RESP on June 2010 once I receive status update from the child benefit?

71 Mike

Dennies – I’m not sure of that timing. Starting the resp in June or later makes sense.

You should call the hrsdc.

72 Andy

Separated father, with two kids, 13 and 17. While married their mother and I were making contibutions to one RESP, which we do not contribute to now.
After separation we have two separate RESP’s (one contibuted to by the mother, one by the father. Is there a problem getting half the grant in one account and half the grant on another account? The bank seems to think so.

Thanks, VERY informative website
A

73 Mike

Andy – sorry about the separation.

The bank is right – you definitely can’t split the grants.

But why would you want to? If only one of you is making the contributions, then just split those contributions between the two RESP accounts.

74 Andy

Hi Mike, thanks for the info…I should have been more clear – actually we are both currently contributing, each to a separate RESP.
The intention is for each RESP to have the same amount of conributions and grants made to it, which will then be drawn out simultaneously.
Is there any way for each account to recieve a portion of the grant? For example:
Can we alternate years for receiving the grant (i.e one year I max out and get the grant in ‘my’ RESP, and she puts nothing in ‘hers’, and the next year we reverse)?
OR
Each year we each put in half the the max amount to get the grant.
OR
any other way that you can think of.
Thanks for the help
A

75 Mike

Andy, I’m not too clear what you mean by a “portion of the grant”.

Are you talking about splitting the amount of available grant for each year between accounts? Ie you contribute $1250 in one account and your ex contributes $1250 in the other account so both accounts each get a grant of $250?

If that is the case then yes, you can do whatever you like. You can have as many RESP accounts as you want and you can get grants in all of them based on the contributions you make in the same year.

Let me know if that doesn’t answer your question.

Mike

76 Andy

Hi Mike:
That’s exactly what we would like to do.
Is the other alternative (alternating yearly) allowed as well?
Thanks again
A

77 Mike

Andy, absolutely – there is no obligation to contribute every year. You can contribute for a few years, take a few years off, alternate years – whatever you like.

You probably know this but the contribution room carries over so you can do partial contributions in a year without any problems.

78 Andy

Thanks for the info Mike, this is a great resource!

79 gsr

If you need to find out how much you have contributed to an individual or family RESP plan, CESG grants received, available etc. you can call 1-888-276-3624. You will need your children’s SIN & DoB.

80 Carol

I heard from rumor saying if we help our children to apply RESP, they cannot apply education loan (grant or government loan), is it true?

Thanks in advance!

81 Dorin

I have two sons 17 and 13 years old.

My older son turned 17 in 2010.
I still have room for his RESP grant.
Question is if I still can get a grant if I deposit $5000 (two years) .
If I can not get the grant for 2010 can I deposit $2500 for a previous year and get the 20%?

82 Mike

@Dorin – The eligibility for grants is based on the calendar year, not the birth day. So someone who turns 17, can receive grants right up to the end of the year.

Keep in mind that there are special eligibility rules for 16 and 17 year olds which are detailed here:

http://www.moneysmartsblog.com/resp-contributions-and-a-reader-question/

83 IMRAN AHMED

I got family plan for three of my kids from TD bank. I deposited 1500/= in total for all of them ( 500 for each ). I was thinking that I will get 40% grant for each child as my income fall in that range. It doesn’t happened. Could some one explain how the grant system works. How much I supposed to get ? Is there any misunderstanding on my side ?

84 Mike

@Imran – you need to contact TD to find out why you didn’t get the grants you expected.

85 bea spiegel

Who supervises how the resp is spent–can a child remove all the funds and not use them for education–I am a grandmother of a family who have resp grants from me–I hold the papers in my name and know the father would love to grasp the funds on the 18th birthday–what is the protection–is there proof needed by the government that it was used for education? If the 2nd child turns 18 and the first one did not go on to school are they transferable? Appreciate your comments. Bea

86 Kyle

If my daughter is born in July 2010, what is my contribution limit to qualify for the grant for her birth year? Can I qualify for the grant up to $2500?

87 Don

Your website is great and much more helpful than the bank or the Feds. I have a RESP account with a bank set up for two children born 1998 and 2000. The balance sits at 25k consisting of contributions, grants, and growth from equities etc. From your examples, the grant eligible room for child 1 is 28k and child 2 is 24k if my math is correct (2k per year to 2006 and 2.5k thereafter).

Since we have not reached the combined total contribution room of 28k+24k = 52k, we would like to make the most of this year’s contribution. From your examples it appears that we can contribute a total of 10k (2.5k for 2010 and 2.5k for previous year x two children). This would maximize the grant for a total of 2k (1k for each child), thus increasing the RESP account by 12k (10k contribution + 2k grant). We could contribute more, but the grant would stay the same.

Is my understanding correct and are there any other factors to consider?

Thank you for taking the time to create this website.

88 Mike Holman

Hi Don, you are correct in that you can contribute $5,000 to each child in your famiy plan account this year for a total of $10k.

Keep in mind that the grant-eligible contribution room is per child, not per account.

89 Shirley

When does the government place the grant money in your account.
We contribute on the 7th of each month and it seems like we don’t get the grant money for 2 months (ie. contribute Sep 7th get grant money Nov 1st). Also, does the government or bank send us a yearly statement of the contributions that we make + the contributions given from the government grant money ?

90 Mike Holman

Shirley, that is correct.

At the end of each month, your financial institution sends a file to the government with all your contribution information. Towards the end of the next month, the government sends a file back to your financial institution with grant approvals and grant money. At that time, your financial institution will deposit the grant in your account.

So if you make a contribution near the beginning of the month – it will be almost two months before you see the grant.

91 Cyril

I have four children born 2002, 2004, 2005 and 2010 and we have been contributing $1,200/year/child for first three children since their years of birth. We had a moderate financial windfall in 2010 due to an inheritance. So, my question is, can we contribute more than the grant eligible amount this year, say $20,000 per child, and then claim the grants in future years for payments already made back in 2010? That is, can we treat contributions like being in a pool that can be applied to the current AND future years? I recognize that we can only claim grants on one year back at a time, so it would take some years to claim all the prior year grants. An example may assist…

(1) I assume the calculations in this step would be true based on your prior facts:
In 2010 we would contribute 4 x $20,000 = $80,000 to our family RESP plan
…and we would get 4 x $2,500 x 20% = $2,000 for our 2010 grant limit
…and we would get 4 x $1,300 x 20% = $1,040 to top up to 2009 contribution to the grant limit for that one prior year
…and we would have contributed $80,000 – 4 x $3,800 = $64,800 above our grant-eligible contribution room for 2010 and that one prior year (I understand there is no maximum contribution per year as long as we don’t exceed the $50,000 per child lifetime limit)

(2) So far so good, but here’s the question:
In 2011 we would again contribute 4 x $1,200 = $4,800
…and we would get $4,800 x 20% = $960 in grants for our 2011 contribution
…but could we also get 4 x $1,300 x 20% +4 x $1,300 x 20% = $2,080 by allocating some of that $64,800 of extra 2010 contribution to 2011 and the one prior year of 2008?

You see because the growth is tax sheltered, it seems to make sense to get the money into the RESP in as early a year as possible. But of course we don’t want to miss out on the matching grants in later years. Based on some conservative growth rate estimates, it would reduce the value of the fund quite substantially (by more than to $100,000 in the expected 25 year life of the fund) if we had to contribute to the fund over the course of six or seven years instead of all at once in 2010.

Thanks in advance for your time and also for your great blog.

92 Mike Holman

@Cyril – No, you can’t.

93 ZT

Thanks for the page, it’s helpful to see all those numbers in one spot like that.

I’ve been contributing about $900 /yr for my child for the past 8 years, collecting the grant as I went (so still have about $5700 of lifetime grant room left). I’m now in a position to contribute a lot, but I only have about 6 years left until my child is 17. I guess I can’t get all the remaining grant by making a big contribution for this year (at most I can collect $5000 minus last year’s grant); so I should make sure to save contribution room for next year to be able to collect the rest, correct?

94 Mike Holman

@ZT – You got it!

95 sw

I opened a family RESP back in 1993 when my daughter was born and a year (1994) later my son arrvied. We have been contributing the maximum every year of first $2000 and now $2500 and receiving the grants…I just heard that there is no limit of contributions per year…so before this year ends can or should I contribute more as my daughter is going off to university in Sept. 2011. If so how much more can I contribute or should I wait until the New Year and do it then? Just to clarify…the maximum lifetime contributions is $50, 000 per child within the plan?

96 Monica

Hi,

I moved back to Canada last year and have been reading up on RESPs for my 6-year old daughter. I haven’t started contributing yet. My question is: If I contribute this year towards last year’s contribution room, will the government assess last year’s income to see if I qualify for additional grants (e.g. Canada Learning Bond) or do they use the current year’s income to calculate everything?

Thanks much,
Monica

97 Beth Chua

My son turned 18 Jan 2011. He decided to work via an appreticeship program. Am I able to transfer his unused RESP savings to my daughter who is now 14?
Please let me know. Thanks.

98 PHIL

Hi Mr Holman,

I am from Montreal, I read your book (great!) and I opened a family RESP last month with Questrade for my son (age: 1). My intention is to use Ishares ETF (XWD @ 70% and XIC @ 30%) because he is young and I am able to take some risks.

I initially wanted to go with TD E-serie (following your advice) but it was not possible to get the QESI (Québec Education Savings Incentive) thru them. In this particular case I think the best option is Questrade.

My question: How commissions are considerated in the RESP. Are they deducted from the contribution and the net contribution is considerated for CESG and QESI calculations OR the contribution is the gross amount even if a part of the deposit is deducted to pay trades ?

For example, if every year I put $2509,90 in the RESP account ($2500 in contributions plus $9,90 for the cost of 2 trades), what will be the amount of my contribution thru the Government for these years: $2500 or $2509,90. For one year, there is not a big difference but after many years, a misundertanding of this rule can make a big difference. I made some researchs on the web about this but I didn’t find the answer.

Thanks in advance
Phil

99 Mike Holman

Hi Phil. Great question. I’ll do a post tonight which will answer.

100 Annie

RESP contribution related to child’s ago
My child is turning 18. She is applying for the universities and anticipates admission in We contributed to her RESP account in the years of 2004 to 2009, but not in 2010. Recently, I went to the bank and requested to contribute money into RESP account, I was told I can not allow to do so when the child turning 17. I can not see this info in any other website. So, is it the rule for a specific RESP provider or is it the government rule?

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