Canada Learning Bond: No RESP contributions required

By: Sound Choices • September 11, 2018 • Personal Finance

RESP Series

A Registered Education Savings Plan (RESP) is a tax-sheltered plan registered with the Canada Revenue Agency (CRA) that can help families save for their children’s post-secondary education.

Contributions made to an RESP grow tax free until the funds are withdrawn to pay when the beneficiary is registered at a qualifying educational program.

RESP savings can be supplemented with government education savings initiatives:


 

Canada Learning Bond

In 2016 3.4 million children were not benefiting from any education savings incentives – of these, about 1.8 million were eligible for the Canada Learning Bond (CLB).*

The CLB is a grant that the federal government deposits directly into an RESP every year if the child is eligible, even if the parents don't add any money.

How much is the CLB?

  • The first year: $500 (plus $25 to help cover the costs of opening the RESP)
  • The following years: $100 for each year that the child is eligible – until the calendar year in which they turn 15
  • Lifetime maximum: $2,000 per beneficiary

Who is eligible for the CLB?

Any child born on or after January 1, 2004 if:

  • they are Canadian residents and have a valid Social Insurance Number
  • their primary caregiver receives the Canada Child Benefit

Is there a maximum income level?

Beginning July 1, 2017**, eligibility for the Canada Learning Bond is based, in part, on the number of qualified children and the adjusted income of the primary caregiver.

 

Eligibility thresholds (July 1, 2018 to June 30, 2019)
Number of qualified children Adjusted income
1 to 3
  • Up to $46,605
4
  • Less than $52,583

5

  • Less than $58,586

6

  • Less than $64,589

Note: Beneficiaries from larger families with higher adjusted income may also be eligible for the CLB.

How do I apply for the CLB?

  • Ensure your tax returns are up to date
  • Open an RESP with the child named as a beneficiary – make sure the RESP provider can handle the CLB as not all do
  • Apply for the CLB – it must be the primary caregiver or their partner who applies

Once the application is approved, the money will be deposited directly into that RESP every year that the child is eligible to receive it.


For more information on RESPs, visit AGF.com/RESP or contact your financial advisor.


 

* Source: 2016 Annual Statistical Review, Canada Education Savings Program, Employment and Social Development Canada. The number of beneficiaries who have ever received Additional CESG is being used as a representation for children from middle- and low income families who have benefited from RESP funds. However, Canadians who opened an RESP before the introduction of the Additional CESG in 2005 would have had to subsequently request the Additional CESG. Given that some Canadians may not have made the new request for the Additional CESG, the numbers being used to represent middle- and low-income families are considered to be understated.

** Source: https://www.canada.ca/en/employment-social-development/services/learning-bond/eligibility.html. From July 1, 2016, to June 30, 2017, a child was eligible for the CLB if the primary caregiver would have otherwise received the National Child Benefit Supplement for the child, had it continued to be paid for that period. For years prior to July 1, 2016, a child was eligible for the CLB if the primary caregiver received the National Child Benefit Supplement for the child.

Adjusted income includes the income of the primary caregiver's cohabiting spouse or common-law partner.

††Source: https://www.canada.ca/en/employment-social-development/services/student-financial-aid/education-savings/resp/resp-promoters/bulletin/notice-2018-772.html. 

Every effort has been made to ensure accuracy at the time of publication, however accuracy cannot be guaranteed and AGF takes no responsibility for reliance on the information contained herein. The contents of this Web site are provided for informational and educational purposes, and are not intended to provide specific individual advice including, without limitation, investment, financial, legal, accounting or tax. Please consult with your own professional advisor on your particular circumstances.