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Canada Education Savings Grant (CESG)

 

A Canada Education Savings Grant (CESG) is a grant offered by the Government of Canada to encourage parents, family and friends to save for a child’s education after high school. A CESG is paid by Human Resources and Skills Development Canada directly into the child's RESP. To date, over two million children have benefited from Canada Education Savings Grants.

 

Eligibility for the CESG

Every child up to and including age 17 is eligible to receive the grant, provided:

  • the child is a Canadian resident;

  • the child has a valid social insurance number (SIN);

  • the child is named as a beneficiary of an RESP; and

  • money has been put into the RESP.  

Special conditions exist for children 15 years of age and older.

Children aged sixteen (16) or seventeen (17) years are entitled to the CESG if one of the following two criteria is met:

1) At least $2,000 in contributions have been made for the beneficiary and not withdrawn before the end of the year in which he/she reached the age of 15 years, or;

2) Annual contributions of at least $100 have been made and not withdrawn for the beneficiary during any four years, consecutive or not, prior to the year in which he/she reaches age 15.

 

The Amount of the CESG

The amount of the grant is based on your family income. The amount can change over time as your family income changes.

On the first $500 of your investments in your child’s RESP in a year, the Canada Education Savings Grant will give you:

  • 40 %, if your net family income is $45,282* or less.

  • 30% , if your net family income is between $45,282* and $90,563*.

  • 20%, if your net family income is more than $90.563*.

*2016 income amounts shown - The family net income amounts are updated each year based on the rate of inflation.

 

No matter what your net family income is, when you save more than $500, the Canada Education Savings Grant will give you 20 cents for every extra dollar  up to $2,500.

 

Your net family income is reported on your Canada Child Tax Benefit statement (commonly known as “baby bonus”, or “family allowance”) that you receive from Canada Revenue Agency each July.

 

CESG Limits

There are annual and lifetime limits on the amount that a child can receive as a Canada Education Savings Grant. The annual limit ranges from $500 to $600 depending on the net income of the child’s family.

 

The lifetime CESG limit for a child is $7,200. If the savings for a child are in a family plan, the lifetime CESG limit for each child is still $7,200.

 

Note: In this case, “lifetime” means from birth up to the end of the year that the child turns 17 years of age.

 

Carry over of the CESG Rights

The earlier a parent applies for the grant (CESG), the sooner the grant money starts to grow in an RESP. However, you can carry over your unused grant amounts for possible use in the future.

 

As of 1998, grant room accumulates for a child until the end of the year in which he/she turns 17, even if he/she is not a beneficiary of an RESP. From 1998 to 2006, $400 was added annually to the grant room for each eligible child since 1998 (or since birth if the child was born after 1998).

 

In 2007 or later, $500 is added annually to the grant room for each eligible child since 2007 (or since birth if the child was born after 2007). Unused Basic CESG amounts are carried forward for possible use in future years.

 

However, the additional amounts for modest- and middle-income families introduced in January 2005 will not be added to grant room available for future.

 

If there is unused grant room because of contributions of less than the maximum in previous years, you can invest more than $2,500 annually and still still received the grant, however, the maximum 20% CESG for a year will be $1,000.

 

Using the CESG

As soon as the child named in an RESP is enrolled in a qualifying educational program or a specified educational program, he or she can start receiving money from the RESP. At that time, the CESG along with income earned by the money in the RESP is paid to the beneficiary as an Educational Assistance Payments (EAPs). Each EAP includes a specific amount of the CESG.

 

If the child named in an RESP does not go on to education after high school, the CESG must be returned to the Government of Canada, unless the RESP is a family plan. If the RESP is a family plan, the CESG may be used by another child named in the plan. That child may use an amount of the CESG up to his or her lifetime limit as described above.  

 

Steps to Getting the CESG

To get the CESG, all you need to do is to:

  • Apply for a birth certificate and then a Social Insurance Number (SIN) for your child.

  • Apply to the Canada Revenue Agency for the Canada Child Tax Benefit, if you qualify.

  • Open an RESP for a child (Call me at 416-493-0101 for details).

  • Put some money in your RESP.

  • The financial institution where you opened your RESP will apply for the CESG on behalf of the child.

The grant money will be deposited directly into your child’s RESP.

 

Other Saving Opportunities

Depending on the income of the child’s family, the child may also qualify for the Canada Learning Bond.

 

Contact us to get more information of how to open RESP, how it can help you to save money for your children's education.

 

If you have any questions or concerns feel free

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Registered Education Savings Plan

RESP: An affordable savings vehicle that can help parents to save money for their children’s post secondary education. Take advantage of :

Canada Education Savings Grant  »

Canada Learning Bond »

Get RESP Illustration for your child

 

Registered Retirement Savings Plan

RRSP: Your retirement program »

Money invested in RRSP is tax deductible and can help you to purchase your first home or pay for your education.

Home Buyer‘s Plan »

Lifelong Learning Plan  »

Spousal RRSP  »

 

Tax Free Savings Account

The TFSA will allow you to set money aside in eligible investment vehicles and watch those savings grow tax-free.  Investment income, earned in a TFSA will not be taxed, when withdrawn.

 

Segregated Funds

Segregated funds: A wide choice of professionally managed invest-ment funds with the security of maturity and death guarantees as well as other benefits.

Segregated Fund Guarantees »

 

 

 

 

 

 

 

 

 

 

Saving for your Children's Post-Secondary Education

  Open RESP for your child

  The Government will add  up to 40% of your contributions in your account

 Get  bonus up to  15% of your contributions from the RESP provider

Get  RESP Quote for your children

 

 

 


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Revised: May 10, 2017