The Canada Education Savings Grant

The federal government recognized the importance of education savings by introducing enhancements to the existing RESP program. The most important improvement was the introduction of the Canada Education Savings Grant (the Grant) in 1998. The Grant is not a loan. It is an annual government contribution to an RESP, equal to 20 percent of the contributor's annual contribution or $500 per year, whichever is less. Each child named as a beneficiary of the RESP is eligible for the Grant. The maximum lifetime grant per beneficiary is $7,200.

Beginning in 1998, RESP beneficiaries are eligible for the Grant from birth. You can carry forward unused grant from birth. You can carry forward unused Grant room until the year your child reaches age 17. However, the most you can receive in a single year using your carry forward is $1,000.

Benefits

• The contributor can save for all the beneficiaries within one plan.
• Easier to manage and monitor your investments than having a number of different plans.
• All the beneficiaries can benefit from the earnings within the plan. For example, if three children are named as beneficiaries and only one child pursues post-secondary education, that child can use the total earnings of the plan for his or her education (subject to the maximum CESG payout of $7,200 per beneficiary).

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