Updated March 2025 · 9 min read
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The Registered Education Savings Plan (RESP) is Canada's dedicated education savings vehicle — and one of the best investments any parent can make. The government's Canada Education Savings Grant (CESG) provides an automatic 20% return on your contributions, making it one of the few guaranteed government-subsidized investment accounts available to Canadians.
You open an RESP for a beneficiary (your child or grandchild), contribute money, and the government adds grants on top. The money grows tax-sheltered inside the account. When the beneficiary enrolls in a qualifying post-secondary program, they withdraw the funds — and since students typically have low income, the tax on withdrawals is minimal or zero.
| Feature | Details |
|---|---|
| Annual contribution limit | None (but CESG is only paid on first $2,500/year) |
| Lifetime contribution limit | $50,000 per beneficiary |
| CESG rate | 20% on first $2,500/year = $500/year |
| CESG lifetime maximum | $7,200 per beneficiary |
| CESG carry-forward | Up to $1,000/year in catch-up grants (if prior years missed) |
| Account holder | Parent, grandparent, or other subscriber |
| Beneficiary age limit for grants | 17 (with conditions after age 15) |
| Tax on growth | None while in RESP |
| Tax on withdrawal | Taxed in student's hands (Educational Assistance Payments) |
The Canada Education Savings Grant is the most compelling reason to open an RESP immediately. The government deposits 20% of your annual contributions (on the first $2,500) directly into the RESP as a grant. That's an automatic, guaranteed 20% return before any investment growth — impossible to match elsewhere.
Maximum annual CESG: $500 (20% of $2,500)
Maximum lifetime CESG per beneficiary: $7,200
Beyond the CESG, lower-income families may qualify for:
See our detailed RESP Grants guide for full eligibility details.
| Type | Description | Best For |
|---|---|---|
| Individual RESP | One beneficiary; any subscriber can open | One child |
| Family RESP | Multiple beneficiaries (must be related by blood or adoption) | Multiple children; share grants and earnings |
| Group RESP | Pooled with other subscribers; sold by scholarship plan dealers | Generally avoid — high fees, restrictive rules |
RESPs can hold ETFs, stocks, bonds, GICs, and mutual funds. The best approach:
When your child enrolls in a qualifying post-secondary program (college, university, trade school, etc.), they can receive Educational Assistance Payments (EAPs) from the RESP. EAPs include government grants and investment earnings — these are taxed in the student's hands, typically at very low rates.
Your original contributions (Post-Secondary Education payments, or PSE) can be withdrawn tax-free at any time.
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