August 2011

With the ever increasing cost of post secondary education, the tax-deferred growth of a Registered Education Savings Plan (RESP) and the Canada Education Savings Grant (CESG) are attractive ways to plan for this major life event.

Benefits of an RESP
  • Tax–deferred growth - Although RESP contributions are not tax deductible, the compounded earnings within the plan are tax sheltered until the intended beneficiary withdraws the funds.
  • Income splitting - When the funds are withdrawn and used to pay for the beneficiary’s post-secondary education, the plan earnings and government contributions are taxed in the hands of the beneficiary whose tax rate is typically in a lower bracket.
  • CESG incentive - The federal government adds 20% to your RESP contributions (up to a maximum of $500 per year, per child). The CESG is payable until the end of the calendar year a beneficiary turns 17. Additional provincial government incentives are also available in Alberta and Quebec.

An RESP can be set up by a subscriber for a beneficiary who is a Canadian resident and has a Canadian Social Insurance Number (SIN). The funds from the RESP can be used towards eligible post-secondary educational institutions for a qualifying educational program.

There are 2 types of RESP: 

  • Individual Plan - created by a subscriber for one beneficiary. A subscriber may designate anyone as the beneficiary of the plan, including themselves, a spouse or common-law partner.
  • Family Plan - set up by a subscriber on behalf of one or more beneficiaries who are under 21 years of age at the time of designation and related to the subscriber by blood or adoption. Children, grandchildren, brothers & sisters are considered blood relations while nieces and nephews are not.

Lifetime maximum

The lifetime contribution limit is $50,000. Over-contributions are subject to a penalty of 1% per month on the amount in excess of the limit. Contributions can be made to a plan for 31 years and the plan matures 35 years after it has been set up. The maximum lifetime CESG is $7,200 per beneficiary. Unused CESG room can be carried forward to future years.

    An RESP is one of the easiest ways to save for the education of your children and grandchildren. If you would like a copy of our detailed educational report on the subject or for more information on your specific situation, please contact your Richardson GMP Investment Advisor.

Previous Tax & Estate Planning Strategies
View items by year:






  • Critical Illness Insurance

    Nov 01, 2011

    Critical Illness isn’t something any of us like to think about, but unfortunately it happens. Despite our progressive healthcare system, we still are faced with increased waiting periods and out of pocket expenses for additional equipment and alternative treatments...
    read more
  • The tax benefits of flow-through share investing

    Oct 01, 2011

    Investing in flow-through shares has been a popular tax reduction strategy for several years in Canada. Flow-through shares allow the issuing company to renounce or “flow through” tax expenses associated with Canadian explora­tion activities to investors...
    read more
  • Modular Benefit Plans

    Sep 01, 2011

    While the cost of group insurance continues to rise, employers are ready to accept reasonable cost increases in order to maintain competitive compensation packages that will help them attract and retain the best employees...
    read more
  • Registered Education Savings Plan

    Aug 01, 2011

    With the ever increasing cost of post secondary education, the tax-deferred growth of a Registered Education Savings Plan (RESP) and the Canada Education Savings Grant (CESG) are attractive ways to plan for this major life event...
    read more
  • Estate bond

    Jul 01, 2011

    Life Insurance can be used as an effective way of accumulating and transferring wealth. An Estate Bond is a financial planning strategy that transfers non registered savings from a tax exposed investment to an exempt life insurance policy...
    read more
  • Cottage succession

    Jun 01, 2011

    For most of us, there are wonderful memories attached to a family cottage. However, at some point, cottage owners will face the financial and emotional challenges of selling or transferring this cherished family asset...
    read more
  • Insured Annuities

    May 01, 2011

    An Insured Annuity provides a guaranteed, tax preferred income stream for as long as you live...
    read more
  • Changes to the Canada Pension Plan and Quebec Pension Plan

    Apr 01, 2011

    The Canada Pension Plan (CPP) has recently implemented changes to benefits that will be phased in gradually over a six year period beginning in January 2011. If you have not already applied for CPP retirement pension benefits...
    read more
  • Tax planning checklist

    Jan 01, 2011

    As we embark on a new year, people tend to turn their attention to planning for the future. While we believe that tax planning should be an integral part of the overall wealth planning...
    read more