Maximize the free government grants and grow your child's education fund tax-sheltered
A Registered Education Savings Plan (RESP) is a tax-sheltered savings account designed to help Canadians save for a child's post-secondary education. Contributions are not tax-deductible, but the investment growth inside the plan is tax-free until the money is withdrawn — and withdrawals are taxed in the student's hands at their lower income rate.
The biggest advantage of an RESP is free government money through the Canada Education Savings Grant (CESG). The government adds 20% on the first $2,500 you contribute each year — that's up to $500 in free money per year.
| Rule | Detail |
|---|---|
| Annual contribution limit | None (but CESG is only on first $2,500/yr) |
| 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 eligibility age | Up to and including year child turns 17 |
| Catch-up room | One extra year of CESG per year missed (max $1,000/yr grant) |
| Plan duration | Up to 35 years after opening |
There is no annual contribution limit — you can put in $50,000 on day one if you want. However, the CESG only applies to the first $2,500 contributed each year. Contributing $2,500 annually is the optimal strategy to maximize free government money.
Every Canadian resident child under 18 is eligible for the basic CESG: 20% on the first $2,500 contributed per year = $500/year maximum. The lifetime maximum CESG is $7,200 per beneficiary.
Families with lower net incomes receive an extra CESG on the first $500 contributed:
Families who qualify for the National Child Benefit Supplement receive up to $2,000 in CLB — no contributions required. $500 in year 1, $100/year for up to 15 years.
British Columbia residents can claim a one-time $1,200 BCTESG when the child is between ages 6 and 9. No annual contributions required to receive this grant. You must apply through a participating RESP provider.
Quebec offers its own grant worth 10% on the first $2,500 contributed annually = $250/year. Additional QESI is available for lower-income families. The lifetime QESI maximum is $3,600 per beneficiary. This is in addition to the federal CESG.
| Plan Type | Beneficiaries | Best For | Flexibility |
|---|---|---|---|
| Individual | One child | Single child, any relationship | High |
| Family | Multiple siblings | Two+ children | High — transfer between siblings |
| Group/Pooled | One child (pooled) | Disciplined savers | Low — strict rules, high fees |
Most Canadians are best served by a family plan at a bank or self-directed brokerage. It allows you to transfer funds between siblings freely and invest as you choose. Group plans (sold by scholarship plan dealers) carry heavy penalties for early withdrawal and are rarely recommended by independent financial experts.
Estimate your RESP balance at age 18 based on your annual contributions.
| Provider | Type | Min Investment | Best For |
|---|---|---|---|
| Wealthsimple | Robo-advisor | $0 | Hands-off, low fees |
| Questrade | Self-directed | $0 | ETF investors, zero buy commissions |
| TD / RBC / BMO | Bank | $25–$100 | Convenience, mutual funds |
| Scotia iTRADE / CIBC | Self-directed | $0–$100 | Bank customers |
For most Canadians, a self-directed RESP at Questrade (buy ETFs for free) or a managed account at Wealthsimple (0.5% MER all-in) beats bank mutual funds with 2%+ MERs over an 18-year horizon.
When the child is enrolled in a qualifying post-secondary program, you can make two types of withdrawals:
Qualifying programs include full-time and part-time college, university, trade, and apprenticeship programs. The student must be enrolled before EAPs can be made.
If the beneficiary never pursues post-secondary education, you have options:
The RRSP transfer option is a valuable backstop — you never truly "lose" the growth, though you do lose the grants if education isn't pursued.