Commonly Asked Questions
An RESP is a special tax-advantaged investment plan that allows a subscriber to invest in the education of a beneficiary child. The advantage of the RESP is that investments are matched by the government up to a lifetime total benefit of $7,200, making them excellent ways to save for your child’s future.
The tax-advantaged status of an RESP allows for deposited amounts to be withdrawn tax free and for government grants and investment income to be taxed at the income tax rate of the beneficiary student. Since students usually have low income and have tuition and tax credits there is often no tax paid at all.
There are many benefits to an RESP including a government matching scheme known as the CESG which can give the beneficiary up to $7,200 in free money, a tax-advantaged investment opportunity, and a great deal of flexibility about how they can be used. This makes RESPs excellent tools for investment.