Tax Benefits

Tax benefits of an RESP

As you contribute money into an RESP, your RESP provider will invest those contributions on your behalf. Over time, those investments will earn you income that is tax-deferred. That means you will pay absolutely no tax on the money your RESP earns as long as it remains in your plan.

sunflower graph showing the difference between regular savings account TFSA and RESP
Accessible when you need it most

Once your child is enrolled in a post-secondary education program, the income earned from your RESP can be withdrawn along with the government grants in the form of Education Assistance Payments (EAPs). Since EAPs are paid directly to the student, there will be little or no tax to pay.

Save up to $50,000 per child

An RESP allows you to save up to $50,000 as a tax-deferred investment, which could be higher than the available amount in your Tax Free Savings Account. Plus you receive the benefits of the government grants. If you contribute the maximum amount per child, you will maximize the tax-deferred benefit of an RESP.

There are even tax benefits if there is any remaining income in your plan or if your child decides not to pursue a post-secondary education:

  • Your net contributions are returned to you tax-free
  • Some or all of the income accumulated in your plan may be returned as an Accumulated Income payment or rolled over into a Registered Retirement Savings Plan (RRSP) provided you have the contribution room.

Future Education Costs in Canada to 2036

Having a clear understanding about the costs associated with post-secondary education will help you determine how much to save.

Forms & Resources

  • Understanding Accumulated Grant Room

    Read More
  • Knowledge First Financial’s Grant Maximizer Tool

    Read More

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