Getting the most out of government grants
Federal and provincial grants can add potentially thousands of dollars to your RESP. And, like your own contributions, they begin to earn tax-deferred compound returns as soon as they’re in your plan. By understanding how to qualify and when to apply, you can make the most of this free money from the government. Here are some tips to help you.
Contribute the Maximum You Can
With the Canada Education Savings Grant, you can 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.
Note that grant amounts are set on an annual basis with a deadline of December 31 each year. In order to receive the education savings grants, be sure to get your contributions deposited in advance of the December 31 deadline. Otherwise, you could lose the grants unless you have carry-forward room as outlined below.
Take Advantage of the CESG Carry-Forward
The CESG also has a special feature that allows you to carry forward unclaimed CESG from years in which you didn’t reach the threshold. The maximum CESG (including the carry-forward) is $1,000 in any given year.
Here’s how the carry-forward works:
Sally opens an RESP for her newborn daughter and contributes $150 per month in the first year. The plan receives $360 in CESG, leaving $140 in unused grant to carry forward for future years. In the second year of the plan, Sally continues her monthly contributions and uses $1,400 of her income tax refund to make a “catch-up” payment, for a total contribution of $3,200. This enables her to receive $640 in CESG.
Read our Pay it Forward
fact sheet to learn more about how to take advantage of unused grant room. Then use our Grant Maximizer Calculator
to find out how to take advantage of the carry-forward based on your situation.
Get your Provincial Grants
In addition to CESG, two provinces in Canada have additional government grants, Quebec and British Columbia. The Quebec Education Savings Incentive (QESI) provides a grant for 10% of your annual contributions on the first $2,500 you contribute to your RESP each year. That’s up to $250 per year with a lifetime maximum of $3,600 per child. Depending on your income, you can earn an extra 5-10% of the first $500 contributed each year.
If you live in British Columbia, your child could be eligible to receive the $1,200 British Columbia Training and Education Savings Grant (BCTESG). No contributions are required, but it is available only to children between the ages of 6 and 9, so be sure to apply before your child’s ninth birthday.
See How to Get Grants
to ensure you are taking advantage of all grants offered
No SIN, No Grants
Remember, in order to receive government grants, your child must have a Social Insurance Number (SIN).