Canada: Registered Education Savings Plan (RESP)

A Registered Education Savings Plan (RESP) helps Canadian families save for a child's post-secondary education, with a valuable government top-up.

How it works

• You contribute after-tax money; investments grow tax-deferred inside the plan.
• The government adds the Canada Education Savings Grant (CESG) — commonly 20% on contributions, up to annual and lifetime maximums — essentially free money.
• Lower-income families may qualify for additional grants (like the CLB).

At withdrawal

• When the child enrolls in eligible education, withdrawals of grants and growth are taxed in the student's hands — usually at a very low or zero rate, given low student income.
• Your original contributions come back tax-free.

Things to note

• Grab the grant: contributing enough to capture the annual CESG is one of the best returns available — free matching money.
• If the child doesn't pursue eligible studies: grants are returned to the government, and growth may face tax plus a penalty (some can be moved to your RRSP if you have room).
• Invest RESP money in diversified funds, shifting toward safety as enrollment nears.

Key takeaway

The RESP combines tax-deferred growth with government grants — start early to maximise the CESG and let compounding build the fund. Confirm current grant rates and limits.