Canada RESP Guide (Registered Education Savings Plan)

the Registered Education Savings Plan (RESP) in Canada. The RESP is a tax-sheltered savings account designed to help the parents and the families save for the child's post-secondary education. The contributions to the RESP are not tax-deductible (like the TFSA), but the investment growth is tax-deferred (the income is not taxed until the withdrawal). The key benefit is the government grants: the Canada Education Savings Grant (CESG) matches 20% of the annual contributions up to $500 per year (lifetime maximum $7,200 per beneficiary), and the Canada Learning Bond (CLB) provides up to $2,000 for the children from the low-income families. The lifetime contribution limit is $50,000 per beneficiary (no annual limit). The RESP can be used for the qualifying educational programs (the post-secondary institutions, the trade schools, the apprenticeships, and the CEGEPs in Quebec). The withdrawals are divided into the Educational Assistance Payments (EAPs) — the grants and the investment income that are taxed in the student's hands (typically at a low or zero rate) — and the Post-Secondary Education (PSE) payments — the contributions that are returned tax-free to the subscriber or the beneficiary.

Contribution Rules

Lifetime limit: $50,000 per beneficiary. The contributions in excess of $50,000 incur the penalty of 1% per month on the excess (the beneficiary cannot contribute after reaching $50,000).
No annual limit: The RESP does not have an annual contribution limit (unlike the RRSP and the TFSA). The subscriber can contribute the full $50,000 at once (if desired), but the CESG is limited to the $500 per year on the first $2,500.
Catch-up CESG: The subscriber can catch up on the unused CESG room. The CESG on the contributions above $2,500 (up to $5,000 total) can be claimed at 20% in the future year, but the maximum annual CESG (including the catch-up) is $1,000.
Beneficiary: The child must be a Canadian resident (the SIN is required for the CESG and the CLB). The beneficiary can be any age (the newborn, the older child, or the adult), but the RESP maximum duration is 35 years (from the date of the RESP opening).
Subscriber: The subscriber (the person opening the RESP) can be the parent, the grandparent, the aunt/uncle, the family friend, or the legal guardian. The subscriber controls the RESP and decides when and how the funds are used.
Family vs Individual RESP: The family RESP allows the multiple beneficiaries (the siblings sharing the same account). The contributions can be reallocated among the beneficiaries (up to the $50,000 limit per beneficiary). The individual RESP is for one beneficiary only. The group RESP is a pooled plan with the shared investment returns (the subscriber must commit to the regular contributions).

Government Grants & Bonds

Canada Education Savings Grant (CESG): 20% on the first $2,500 of the annual contributions ($500 per year). The lifetime maximum is $7,200 per beneficiary. The additional CESG (the income-tested "Additional CESG") provides 10% or 20% on the first $500 of the contributions for the families with the adjusted income below $55,867 (the "low-income" and the "middle-income" thresholds).
Canada Learning Bond (CLB): $500 for the first year of the eligibility plus $100 per year (up to age 15, with the maximum of $2,000 per child). The CLB is available for the children from the low-income families (the adjusted family income below $55,867). The CLB does NOT require the parental contributions (the RESP must be opened, but no contribution is needed to receive the Bond).
Provincial grants: The Quebec Education Savings Incentive (QESI) provides 10% on the contributions up to $2,500 ($250 per year, with the additional 20% on the contributions up to $500 for the families at the income below $53,820). The British Columbia Training and Education Savings Grant (BCTESG) provides a one-time $1,200 grant for the children born after 2006 (the application must be made by the child's 7th birthday).
Grant repayment: If the RESP is terminated without the beneficiary attending the post-secondary education (or if the RESP is collapsed), the CESG and the CLB must be repaid to the Government of Canada. The subscriber does NOT repay the grants if the funds are transferred to the RDSP (under the 2024 Budget rules).

Withdrawals & Education Payments

Educational Assistance Payments (EAPs): The EAPs consist of the CESG, the CLB, the provincial grants, and the investment income. The EAPs are taxable in the student's hands (the student typically has the low or zero tax rate due to the tuition tax credit and the basic personal amount). The limit on the EAP withdrawals in the first 13 weeks of the full-time study: $8,000 (or $4,000 for the part-time study).
Post-Secondary Education (PSE) payments: The PSE payments are the return of the contributions (the principal). The PSE payments are tax-free (the contributions were already taxed before the RESP deposit). The PSE payments are not limited and can be withdrawn at any time.
Qualifying programs: The RESP can be used for the programs at the universities, the colleges, the CEGEPs, the trade schools, the apprenticeship programs (the "qualifying educational programs" — the programs that run for at least 3 weeks with 10+ hours per week of the coursework).
Specified educational programs: The RESP can also be used for the "specified educational programs" (the programs at the foreign universities that are at least 13 weeks long). The EAPs for the foreign institutions are limited to the $2,500 per 13-week period.

RESP Termination & Accumulated Income

Accumulated Income Payments (AIPs): If the beneficiary does not pursue the post-secondary education (and the RESP is at least 10 years old and the beneficiary is 21+), the subscriber can receive the AIPs (the investment income from the RESP). The AIPs are taxed at the subscriber's marginal rate plus an additional 20% (or 12% in Quebec) penalty. The subscriber can contribute up to $50,000 of the AIPs to the RRSP (if the subscriber has the RRSP room).
Extended period: The RESP can remain open for up to 35 years from the opening date (the "maximum duration"). The subscriber can wait until the beneficiary turns 35 (or even older, up to the 35-year limit) to use the funds.
Transfer to RDSP: Starting in 2024, the RESP investment income (including the grants, up to the $50,000 lifetime limit) can be transferred to the RDSP (Registered Disability Savings Plan) if the beneficiary has the disability (the DTC certification). The transfer is tax-free and preserves the government grants.
RESP to RRSP transfer: The subscriber can transfer up to $50,000 of the AIPs to the subscriber's RRSP (if the RRSP room is available). The transfer avoids the additional 20% penalty but the AIP is still taxed at the subscriber's marginal rate when withdrawn from the RRSP.
Death of the beneficiary: If the beneficiary dies, the RESP contributions are returned to the subscriber (tax-free). The grants and the investment income (the AIPs) are treated as the income of the subscriber (with the 20% additional tax). The subscriber can transfer the AIPs to the RRSP (if the RRSP room is available) or to the RDSP of the surviving sibling.

For the disability savings plans and the RDSP rules, see our RDSP Guide →. For the tuition tax credits and the post-secondary education deductions, see our Tuition Tax Credit Guide →.