Are You Leaving Money on the Table?
3 min readBrought to you by Sound Choices - AGF Education for Investors and Advisors
Did you know RESP (Registered Education Savings Plan) savings can be supplemented with government education savings initiatives, with the main one being the Canada Education Savings Grant (CESG) paid by the federal government?
Key Facts about the Canada Education Savings Grant (CESG)
- All RESPs are eligible for Basic CESG
- The Government of Canada will match a percentage of your RESP contributions by depositing the CESG directly into the RESP
- $500 each year (20% of the first $2,500 of annual contributions per beneficiary)
- Up to $1,000 if carry-forward room is available (grant room is cumulative and can be carried forward). So if you cannot make a contribution in any given year, you can carry over unused Basic CESG.
- CESG paid into a Family Plan RESP may be used by any beneficiary of the RESP to a lifetime maximum of $7,200 per beneficiary – this includes both the Basic and Additional CESG
What determines if you are eligible for the CESG?
- Beneficiary and subscriber must have a valid SIN and be a Canadian resident
- Contributions must be made before the end of the calendar year the beneficiary turns 17
- Special rules apply to beneficiaries age 16 and 17
How much of a difference can the CESG make?*
Family #1 – no CESG
- Invested $100 bi-weekly into a non-registered account
- This investment doesn’t qualify for the Canada Education Savings Grant (CESG)
Family #2 – RESP with CESG
- Also invested $100 bi-weekly – but into an RESP account
- This investment qualifies for the CESG – 20% of their monthly contributions
Do you qualify for additional education savings grants?
Additional CESG is available to qualifying families**:
| Family Income | CESG Available |
| $0–$50,197 | $600: $500 (Basic CESG) + $100 (additional 20% on the first $500 of annual contributions per beneficiary) |
| $50,198–$100,392 | $550: $500 (Basic CESG) + $50 (additional 10% on the first $500 of annual contributions per beneficiary) |
How do I apply for the CESG?
- Ensure your tax returns are up to date
- Open and contribute to an RESP with the child named as a beneficiary – make sure the RESP promoter allows for the Additional CESG payment as not all do
- Complete the CESG application form. Your RESP provider will then request the CESG.
Once the application is approved, the appropriate amount will be deposited directly into that RESP.
Talk to a financial advisor to learn how they can help you and visit AGF.com/RESP.
* Source: AGF Investments Inc. Both examples are based on bi-weekly contributions of $100 (for a total of $2,600 over 12 months) and exclude fees. For the RESP example, Family #2 received the Canada Education Savings Grant of 20% of contributions to a maximum of $500 per year. Family #1 invested in a non-registered account that consisted of only interest earnings and assumes a marginal tax rate of 40%. Family #1 paid taxes on their non-registered investment at the beginning of the 17th week each year except the first year. Growth of investments for both families is based on the assumption of a 6% average annual compound rate of return over 18 years. The rate of return is used only to illustrate the effects of the compound growth rate and is not intended to reflect future values or returns on investments.
** Source: Canada Education Savings Program, Information Bulletin #CESP/PCEE-2021/2022-007-924, December 6, 2021. Dollar amounts are updated annually based in part on the rate of inflation.
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The commentaries contained herein are provided as a general source of information and should not be considered personal investment or tax advice. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change investment decisions arising from the use or reliance on the information contained here.
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RO 2272776
July 25, 2022
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