By Pankaj Babbar, licensed advisor at SAI Insurances · 3 min read
1-minute read
The short answer
- An RESP is a registered account for a child's education after high school.
- The government adds a Canada Education Savings Grant (CESG) of 20% on what you put in, up to $500 a year per child.
- You can contribute up to $50,000 per child over their lifetime, and the CESG can add up to $7,200.
- Growth isn't taxed while it stays in the plan. Withdrawals for school are generally taxed in the student's hands, often at a low rate.
- Eligible families may get extra grants on top. Starting early gives the grant more years to grow.
Detailed guide · 2 min read
Free money, with a few rules attached
Ask parents what an RESP is and many will say "a savings account for school." That's true, but it undersells the best part: for every dollar you contribute, up to a yearly limit, the government adds a grant. Few other accounts in Canada come with a built-in top-up like that.
How the CESG works
The Canada Education Savings Grant matches 20% of your annual contributions, up to $500 a year for each child. Over a child's lifetime the grant can reach $7,200. Some families with lower incomes may also qualify for enhanced grants or other government incentives.
A hypothetical example: contribute $2,500 in a year, and the 20% grant adds $500.
The limits to know
- $50,000 lifetime contribution limit per child.
- $500 basic grant per child per year on regular contributions (unused grant room can carry forward).
- $7,200 maximum basic grant per child over their lifetime.
These figures can change, so check the current CRA and Government of Canada rules before relying on them.
Why starting early matters
The grant is paid on contributions year by year, so the earlier you start, the more years of grants you can collect and the longer the money has to grow. Even small, regular contributions add up when a child is young.
What happens when your child goes to school
When your child enrols in qualifying post-secondary education, money comes out as educational assistance payments. The growth and grants are generally taxed in the student's hands — and since most students earn little, the tax is often small or nil. Your original contributions can generally come back to you without tax.
What if they don't go?
Plans have options if a child chooses not to continue their studies — such as naming another eligible beneficiary or, in some cases, transferring savings. Grants may have to be repaid, so it's worth understanding the rules for your plan before you need them.
How we help
We help you open an RESP, set a contribution amount that captures the grant, and choose investments that suit your child's age. Learn more on our RESP page, or ask us in English, Hindi or Punjabi.
This article is general information, not financial or tax advice. Grant amounts, contribution limits and eligibility rules are set by the Government of Canada and the CRA and can change — check the official sources for current figures, and your advisor confirms what applies to your family.