Getting the most out of government grants
Government grants are a smart and easy way to add thousands of dollars to your education savings. The amount of government grants you receive are determined by how much you contribute to your RESP and when you apply for the grants. Every dollar contributed by the government grants is one less dollar parents need to invest out of pocket. And every little bit helps when it comes to saving for post-secondary education.
Maximize your RESP savings with CESG
With the Canada Education Savings Grant, you earn 20% on the first $2,500 you contribute each year to your child’s RESP to a maximum of $500 per child per year. If you qualify for the additional CESG, you could earn an extra 10-20% on the first $500 contributed for an additional $100 per year. The combined lifetime maximum for CESG and A-CESG is $7,200 per child. Here are some ways you can receive the maximum $7,200 CESG grant:
- Receive the annual maximum of $500 CESG for each child by contributing $2,500 to your RESP
- Reach lifetime limit of $7,200 before the end of the year your child turns 17
- Take advantage of unused CESG that can carry forward for up to 3 years, for a maximum of $1,000 per year
Take Advantage of unused CESG
If you haven’t been able to contribute $2,500 annually to your child’s RESP, you can receive unused CESG from previous years by making additional contributions in future years. This approach is especially useful if you started your RESP a little late. When you carry forward grant room from previous years, you can earn 20% on up to $5,000 of your contributions to receive the maximum annual grant per year of $1,000. No matter how much you contribute in any one year, the maximum annual CESG payment is $1,000. Here’s how it works:
Sally opened an RESP for her newborn daughter and contributed $150 per month in the first year. The plan received $360 in CESG, leaving $140 in unused grant to ‘carry forward’ for future years. In the second year of the plan, Sally continued her monthly contributions and used $1,400 of her tax return money to make a ‘catch up’ payment. This enabled her to receive the full $1000 in CESG that her two-year old daughter was eligible for. Sally plans to earmark ‘extra money’ each year to ensure she is able to collect the full CESG for her daughter.
Figuring out how to carry forward unused grant room can be complicated, so we developed our RESP Grant Maximizer Calculator to make it easier. The calculator is based on your child’s age and RESP contributions made to date. It is a useful tool to show you how to take advantage of unused CESG.
Provincial Government Grants
In addition to CESG, three provinces in Canada have additional government grants – Quebec, British Columbia and Saskatchewan. Many eligible children have yet to receive the provincial grants available, especially since the ones from British Columbia and Saskatchewan are relatively new. To apply, send a completed application form to Customer Service today.
See How to apply for government grants to ensure you are taking advantage of all grants offered.