- What's the easiest way to get started?
The easiest way to start an RESP is with the BlueShore Financial RESP Growth Savings Account. With its premium interest rate, it offers an ideal way to accumulate funds until you have enough to invest in other higher-growth investments. It's also an excellent idea to arrange for pre-authorized contributions to make building your savings as convenient and affordable as possible. You can start with as little as $50 per fund per month which can be automatically transferred to your account on a schedule that suits you. If you receive the federal government's Universal Child Care Benefit ($100 per month each child under six) you may want to consider investing this in your child's RESP or other investment options. The Universal Child Care Benefit is a taxable benefit so talk to us about the options best for you and your tax situation.
- How much money can I save in my child's RESP?
A Registered Education Savings Plan (RESP), created by the Federal Government to help parents provide full education opportunities for their children, allows you to save a lifetime total of $50,000 per child in a tax-sheltered plan.
- What is the Canada Education Savings Grant (CESG)?
The Canada Education Savings Grant (CESG) is a government grant that provides an amount equal to 20% of your RESP contributions. It's extra money that can add up to $500 per year for each child, to a maximum grant of $7,200 over the life of the plan. The grant money will grow with interest, too.
- Are there any age restrictions with the CESG?
The CESG is only paid on contributions made for children up to the end of the year in which they turn 17. However, for children who will be age 16 or 17 in the year, the CESG payments will only be made if one of the following conditions are met:
- A minimum of $2,000 in RESP contributions must have been made on behalf of the child before the year he/she turns 16; or
- A minimum of $100 in annual RESP contributions must have been made on behalf of the child in any four years before the year the child turns 16.
- What kind of tax rules apply to an RESP?
While the contributions you make to your plan are not tax-deductible, the investment income generated in your savings plan – income such as interest, dividends or capital gains – is not taxed until the funds are withdrawn from the plan. When you save in an RESP, your contributions and your CESG enjoy compound growth that is tax-sheltered. When the time comes to withdraw funds from your plan, the money is paid in your child's name to reduce taxes. Since students have generally low income levels, little or no tax is payable.
- Can I include mutual funds* in my RESP?
BlueShore Financial provides a full range of quality mutual funds – from conservative income funds to more aggressive equity funds – so that you can create a diversified RESP portfolio. We also provide investment support, investment tools and personalized service to choose the funds that can help your savings grow faster.
Be sure to consult with an investment professional when you set up your plan and on a regular basis thereafter. A good professional will consider your overall financial picture and help select your best savings and investment options.
- What’s coming out of your RESP?
Your RESP is a combination of your original contributions, any Canada Education Savings Grant (CESG) or BC Training and Education Savings Plan (BCTESP) money you've received and investment earnings. You access funds from this savings pot in two ways: through Educational Assistance Payments (EAPs) and Post-Secondary Education withdrawals (PSEs).
- What is an EAP?
EAPs combine the grants you’ve received and the interest accumulated over the years, regardless of how your money has been invested. At any time, the subscriber can withdraw as much as they need of their own contributions (PSEs) for the benefit of the beneficiary’s education, but there are limitations for EAP withdrawals.
- What are the EAP limits?
You’re only allowed to take out $5,000 in EAPs in the first 13 weeks of enrolment in post-secondary studies for a full-time student ($2,500 for part-time studies). After the 13 week time frame, there is no limit unless the student takes a break from studies and does not enroll in a designated educational institution for 12 months. If this is the case, the original 13 week limit is reinstated when the beneficiary resumes their studies.
- Is the post-secondary educational institution a designated school?
A Master List of Designated Educational Institutions is available on the government of Canada’s website.
- How long does the course have to be in order to withdraw EAP?
Three weeks for courses in Canada, 13 weeks for courses outside of Canada
- What forms are required for RESP withdrawals?
CRA requires: Proof of Enrolment Letter from the post-secondary educational (PSE) institution or an RESP Verification for Enrolment or T2202A- Tuition, Education and Textbook Amount Certificates and RESP Withdrawal Form signed by subscriber and/or beneficiary and authorized by a BlueShore Financial RESP Promoter.
- What is an acceptable Proof of Enrolment letter?
The Proof of Enrolment form can be obtained from the office of the Registrar or can be printed from the school’s website. It must be signed by the Office of the Registrar on institution’s letterhead, has a Student ID, name of student and the name of the PSE. It indicates clearly that the beneficiary is enrolled in full or part time courses for the current academic year. Course Calendar or some indication of the dates the beneficiary is attending the PSE.
- What is NOT accepted as Proof of Enrolment?
- Letters of Acceptance
- Offers of Admission
- Tuition Fee Breakdown
- Student Cards
- Invoices or receipts (for example: receipts for student housing, books, registration deposits are not acceptable)
- Who signs the RESP Withdrawal form?
For EAP contribution withdrawals both the Subscriber and the beneficiary sign.
For PSE contribution withdrawals only the subscriber is required to sign.
- What are the income tax implications?
If an EAP contribution withdrawal is processed from an RESP, the beneficiary must claim this as income. A T4A will be mailed out to the beneficiary.
- How are payments from the plan made?
There are a variety of payment methods available. A cheque may be mailed to the beneficiary’s mailing address, to the address listed on the account, or directly to the educational institution address that is provided on the RESP withdrawal form. If the cheque is mailed directly to the educational institution, you must ensure that the Student ID number is provided in the proof of enrolment.
BC Training and Education Savings Program
- What is the British Columbia Training and Education Savings Program (BCTESP)?
It’s a grant program designed to help BC families start planning and saving for their children’s post-secondary education earlier. The program will provide a $1,200 grant for your child’s RESP, with no matching or additional contributions required on your part.
- When can I apply for the BCTESP grant?
You can apply for the BCTESP grant any time after the child’s sixth birthday up to the day before their ninth birthday. To be eligible for the BCTESP grant, your child must:
- Have an RESP
- Resident in BC
- Like the additional CESG, is BCTESP eligibility based on a net family income?
No. Beneficiaries are eligible if they meet the age criteria and the custodial parents are BC residents.
- Is there a cutoff date for application?
Yes, a beneficiary’s last day to apply is the day before they turn nine years of age.
- Does a RESP contribution have to be made to receive the BCTESP grant?
No. If the beneficiary is eligible to apply for the grant, they will receive the $1,200.
- What happens if the subscriber applies for the BCTESP grant at BlueShore Financial and another financial institution?
The grant will be paid to the first request submitted and successfully processed. Beneficiaries can only receive a onetime payment of $1,200.
- Is the BCTESP grant pooled in family plans?
Yes, like the CESG, this grant is also pooled along with any earnings generated. These funds can be shared by any eligible beneficiary when withdrawing an Educational Assistance Payment.
- Will the subscriber be taxed on the grant?
No, the BCTESP is not considered taxable income until it is taken from the RESP in an Educational Assistance Payment for post-secondary education. Once deposited into the RESP, it also grows tax-free. However, money paid out of the EAP is taxed as income in the hands of the student. Since many students have little to no income while they attend post-secondary education, they can usually withdraw the money tax-free.
- What if my child was born in B.C. but we have since moved away. Is my child eligible to receive the $1,200 grant?
The child and a parent/guardian of the child must be residents of British Columbia at the time of application for the BCTESP grant.
- If we get the grant and then move out of B.C., do we have to return it?
No, the BCTES grant is paid into your child’s RESP and if you move out of British Columbia at a later date, the grant will not have to be returned.
- Are there restrictions on how my child can use the money?
Yes, under the Income Tax Act the grant must be used in an Educational Assistance Payment towards a qualifying post-secondary education or training program. For more information visit the Canada Revenue Agency website.
- Does the BCTESP grant have to be used towards a post-secondary institution in B.C.?
The grant can be used at any qualifying post-secondary education or training program in Canada or outside Canada.
Additional information and a list of certified institutions can be found on the Canada Revenue Agency website. To confirm that an educational institution qualifies, call the Individual Income Tax Enquiries telephone service at 1-800-959-8281.
- What if my child decides not to go to a post-secondary institution? Will I have to return the grant?
In the event that the RESP is closed or the beneficiary chooses not to pursue a post-secondary education or training program, the BCTESP grant must be returned to the Province of British Columbia.
*Mutual funds are offered through Credential Asset Management Inc. Mutual funds and other securities are offered through Credential Securities, a division of Credential Qtrade Securities Inc. Credential Securities is a registered mark owned by Aviso Wealth Inc.