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So what’s this all about?
Here’s an overview of the Canada Education Savings Program: support for families to save for their children’s education after high school. The program has 3 important pieces that all work together:
- REGISTERED EDUCATION SAVINGS PLAN (RESP): This is a special type of savings account that a child needs to have opened in their name to receive the government money for education (Canada Learning Bond and Canada Education Savings Grant).
- CANADA LEARNING BOND (CLB): The government will contribute up to $2,000 into the RESP accounts of eligible children, without families needing to add any of their own money. This is only available to families living on a lower-income.
- CANADA EDUCATION SAVINGS GRANT (CESG): If a family contributes savings into the RESP account, the government will add even more money to help those savings grow. The amount of money your family can receive from the government depends on your income level.
WoodGreen Financial Empowerment provides clear and unbiased information and support on this program to help you receive the maximum amount of funding for your child’s education after high school. Click below for more information.
Questions about RESPs
What is a Registered Education Savings Plan (RESP)?
An RESP is a special type of savings account to help save money for your child’s education after high school. The account is registered with the Government of Canada, and it is your key to accessing the Canada Learning Bond and Canada Education Savings Grant.
You can open an RESP account at most financial institutions in Ontario, such as your bank or credit union.
How do I open an RESP account and apply for the Canada Learning Bond?
What do I need to open an RESP account?
- The Parent/Primary Guardian’s Social Insurance Number (SIN) and contact information.
- The child’s name, date of birth, and Social Insurance Number (SIN)
If you have these documents ready, you can start your application online right now!
How do I get a Social Insurance Number (SIN) for myself or my child?
It’s Easy to Get One:
- You must provide valid primary documents that proves you and your child’s identity and legal status in Canada. A list of acceptable documents can be found here.
- Take original documents to a Service Canada office location.
- If everything is in order, you will get your SIN during your visit
Service Canada staff will be on-site performing SIN registrations during select community workshops. Check out our workshop schedule for details!
What types of education can the money from an RESP account be used for?
The money in a RESP can be used for a wide-range of education options after high school, including:
- part-time or full-time study
- university or college
- apprenticeship programs
- trade school
- International studies
Do I have to put my own money into the RESP account?
No, most RESP accounts do not require you to deposit any of your own money. You can open one of these accounts with zero dollars, just to receive the Canada Learning Bond money from the government and never add any of your own money to the account. However, while all of the major banks in Canada offer these RESP accounts, some specific RESP account types do have minimum contribution requirements. Be sure to ask questions before you sign any contracts.
If you are able and want to add money to your child’s RESP account, the government offers the Canada Education Savings Grant (CESG) to help your savings to grow much faster. Learn more about the CESG by scrolling further down this page.
Are there any special tax rules for money in an RESP?
Yes, it is a tax-sheltered account! This means that while money sits in an RESP account, any interest that is earned on it does not need to be claimed as income on your tax return. The savings grow tax-free until your child withdraws the money to pay for their education.
When your child takes money out of the account to pay for school, any government money (CLB & CESG) and the interest that was earned in the account will be taxed as part of the child’s income for that year. Only the money that you had contributed to the account is not taxable. However, since the child will be a student at the time, it is expected that their tax rate will be extremely low (many students don’t pay any taxes at all).
How does money saved in an RESP account impact my eligibility for other government programs (e.g. Ontario Works, subsidized childcare)?
Money in an RESP account is not considered an “asset” and will not impact your eligibility for social assistance or subsidy programs. Likewise, government money (from CLB or CESG programs) or personal savings deposited in the RESP account are not considered income for the parent, and will not harm your eligibility for social assistance or subsidy programs in any way.
For example, if a grandparent added money to the RESP savings account, this would not be considered an “asset” or income, and does not need to be reported on your monthly OW report.
Does it matter which bank I choose to open an RESP account?
Not really. If you are considering one of the major Canadian banks or credit unions, they all offer very similar RESPs with no fees and no requirement for you to deposit any of your own money into the account. You may choose to open your RESP account with the bank or credit union where you already have a chequing account, simply because it’s convenient!
However, there are some RESP accounts that have fees, require you to make a minimum deposits into the account, or aren’t able to get you the Canada Learning Bond. Ask questions before signing any contract – see the next topic for a full list of questions to ask.
What questions should I ask when I’m setting up my RESP account?
Not all RESP accounts are the same. While most will not cost you anything, some RESP accounts have fees, or require you to make a minimum deposits into the account. A few account types aren’t able to get you the Canada Learning Bond!
It is helpful to ask the following questions before signing any contract:
- Will I be getting the Canada Learning Bond and Canada Education Savings Grant with this RESP account?
- What types of RESPs do you offer (family, individual and group)? What are the differences, and which is right for me?
- What investment options do you offer (high interest savings, GIC, mutual fund)? What are the pros and cons of each investment option?
- Do I have to pay any fees for opening the RESP, withdrawing money from it, managing it or for any other services?
- Are there any requirements for me to deposit money into the account?
- What will happen if my child does not continue his or her education after high school?
- If I have to take out some of the money or close the RESP early, will I:
- Have to pay fees or penalties?
- Lose the interest earned in the RESP?
- Be able to transfer the money to another type of RESP or registered investment product?
We also encourage you to Download your bank or credit union’s one page flyer and bring it with you to the bank. To avoid any confusion, these flyers help you show your bank the RESP account type that you want to open to receive the Canada Learning Bond, using the bank’s own words and logo.
Using our online application tool can also help to ensure that your bank knows you are signing up for a no-fee RESP account that doesn’t require for you to deposit any of your own money in the account.
If I put money in the RESP account, can I take it out if I need it?
Yes. As the account “subscriber”, you are allowed to take out your money at any time.
However, depending on how your RESP account is invested (high interest savings, GIC, mutual funds) there could be fees or delays involved for taking the money out early. Be sure to ask about this when you are setting up your RESP account.
If the money you are taking out of the RESP had been matched with extra government money through the CESG, then the government money goes back to the government when you withdraw your money. Read the CESG section below for more information.
Can my child still receive OSAP grants and loans if they have money in an RESP?
Yes. Money from an RESP will not affect the amount of OSAP grants and loans that a child is eligible for.
What happens if my child doesn’t continue their education after high school?
There’s no rush to decide – the account can remain open for 35 years! This means that your child will still have their education savings available many years later, even if they do not want to, or are not able to, continue their education immediately after high school.
However, if you do decide to close the account or it expires after 35 years, the money contributed by the government (through the Canada Learning Bond and Canada Education Saving Grant) will be returned to the government.
If you deposited money into the account you will be able to get your money back, or you may choose to roll your savings directly into your own Registered Retirement Savings account. In some cases you will also be able to keep the interest that it earned.
Questions about the Canada Learning Bond
What is the Canada Learning Bond (CLB)?
The Canada Learning Bond (CLB) is money that the Government of Canada deposits directly into an eligible child’s RESP account to help pay for education after high school. Eligible families can receive up to $2,000 for each child, simply by opening an RESP account and applying for the Canada Learning Bond. This money will not be counted as “income” for the parents, and will not impact OW or ODSP income amounts
How does the Canada Learning Bond (CLB) work?
You access the Canada Learning Bond (CLB) through opening a Registered Education Savings Plan (RESP) for the child. If eligible, the CLB will provide you with an initial payment of $500 into the child’s RESP and additional payments of $100 per year the child is eligible up to age 15 years.
$500 first payment + ($100 per year x 15 years) = $2,000
What is the eligibility criteria for the CLB?
To be eligible for the CLB:
- Your child must be born after 2004
- Have a Social Insurance Number
- Be a Canadian resident
- Have a net family income of less than $45,916 (This is the income threshold if you have 1-3 children. The eligible income level is higher if you have more children.)
The CLB is paid to you in yearly amounts: $500 at first, and then $100 every year until the child is 15 yrs old. Each year, the government confirms whether your child is eligible for that year’s $100 payment by looking at your net family income on your tax return. You must keep filing your tax returns each year to receive the yearly payments.
How do I apply for the CLB?
To apply for the CLB, you need to open an RESP account and sign the CLB application form. If your child is eligible, the government will deposit the CLB money into the RESP account and continue to add to it each year (if your income is still below the threshold) until your child’s 15th birthday.
You will need to file your tax return each year, as this is how the government confirms your income level for that year. The money needs to stay in the RESP account until your child is ready to use it for education after high school.
What if my family’s income is too high to qualify for CLB one year?
The government uses your tax return each year to confirm your net family income. Only in the years in which your net family income was below the eligibility income threshold will the additional $100 be added to your child’s RESP account. If your income is too high one year (maybe you or your spouse got a new job), you will simply not receive the $100 CLB money for that year. Each year is assessed separately – being ineligible for the CLB one year does not affect the money you received previously when you were eligible.
Why is it recommended to apply for the CLB as early as possible?
Applying for the CLB early can be helpful for 2 reasons:
- To take advantage of the interest that is earned over time. Opening an RESP as early can mean more money for your child’s education.
- Having early education savings can help you to start conversations with your children about their future opportunities. When children know they have education savings, it can help strengthen their aspirations and put them on the path to further education.
My child is already 4 years old. Can I still receive CLB money for the years that I missed?
Yes, the CLB will be paid retroactively for each year your child was eligible.
For example, if you opened an RESP when your child was 4, and your tax returns show that your net family income was below the income threshold for all 4 years of your child’s life, $900 would be deposited right away into your child’s RESP account.
$500 initial payment + ($100 x 4 years) = $900
Then, each year going forward until your child’s 15th birthday, you would continue to receive an additional $100 per year into the account (if eligible).
How does my child take out the CLB money when ready to go to school?
This is done by simply showing proof of enrollment in an eligible education program to the financial institution. In most cases this means providing one or more documents demonstrating key elements (student name, program name etc.) for enrollment in the current year.
What happens to the CLB money if my child does not attend education after high school?
Your child will either “use it or lose it”. The CLB money can only be used for education after high school – if your child does not attend education after high school, then the CLB money is taken back by the government.
However, there is no rush to decide – the RESP account can remain open for 35 years! This means that your child will still have their CLB money available many years later if they choose to go to school.
Are there any risks in applying for the CLB?
No, there is no risk in applying for the CLB when you open the RESP account. Your child will only receive CLB money in the account if the government confirms that they are eligible. It is worthwhile to apply even if you’re not sure of eligibility.
Questions about Canada Education Savings Grant (CESG)
What is the Canada Education Savings Grant (CESG)?
The Canada Education Savings Grant is money offered by the Government of Canada to match any contributions made to a child’s RESP. For each dollar you put in an RESP, the Government provides between 20-40 cents. How much you receive depends on your income level.
How does the CESG work?
“Basic” CESG: the government will match 20% on the first $2,500 in annual savings in a RESP. This is available for all families, of all income levels. Example: If you save $100 in an RESP, the government will add $20
“Additional” CESG: The government increases the matching contribution on the first $500 in annual savings in an RESP. This is only available to families with eligible income levels.
If your family’s net income is between $45,916 and $91,831 per year, you will receive a total 30% matching on the first $500 in annual savings in a RESP. Example: If you save $100 in an RESP, the government will add $30
If your family’s net income is below $45,916 per year, you will receive a total 40% matching on the first $500 in annual savings in a RESP. Example: If you save $100 in an RESP, the government will add $40
At these rates, your savings grow very quickly! There is a maximum lifetime amount of up to $7,200 in CESG money (no matter your income level).
What is the eligibility criteria for the CESG?
To be eligible for the Basic CESG, a child must:
- Be under the age of 16 years old
- Have a valid Social Insurance Number (SIN)
- Be a Canadian resident
- Have money deposited into his or her RESP (from a friend or family, not the government)
In addition to the above criteria, to be eligible for the Additional CESG, you need:
- A family net income of less than $91, 831 per year
- You will receive the maximum level of Additional CESG if your net family income is less than $45,916 per year
How do I apply for the CESG?
To apply for the CESG, you need to open an RESP account and sign the CESG application form. The government will use information from your tax return to decide if you are eligible for the Basic CESG (all income levels) or the Additional CESG (if your income level is below the eligibility threshold).
Actually, it is a good idea to apply even if you do not have any money to deposit into the RESP account right away. This will make sure that the CESG is already set up if you are able to deposit savings in the account in the future.
Does the money have to come from the caregiver(s) for it to be matched by the CESG?
No, anyone can put money into an RESP for a child, as long as the deposit is approved by the account holder/”subscriber”. All money that is saved in the RESP account is treated the same and matched by the CESG, no matter where it came from.
Some families get creative with fundraising for their child’s education by asking for donations to their child’s RESP account instead of birthday or holiday gifts. Some children even run fundraising activities for themselves!
What will happen to the CESG money if I withdraw my savings early?
If you withdraw the money that you put into the RESP account early, the money from the CESG (the government money) matching your contributions goes back to the government.
Example: You had deposited $100 into your child’s RESP account in one year. Let’s say that, based on your income level, the government had given you the highest level of Additional CESG matching for your savings contribution (40%).
$100 personal deposit + 40% Additional CESG = $140 in the RESP account
If you take your $100 out of the account before your child attends education after high school, the government will automatically take back their $40 in CESG.
What if I apply for the CESG, but I am not able to contribute any money to my child’s RESP account?
There is no requirement to contribute to your RESP. If you apply for the CESG and are not able to contribute to the RESP account, nothing will happen, no CESG contributions will be put into the account.
Is there any risk in applying for the CESG?
No, there is no risk in applying for the CESG when you open your RESP account, whether or not you have money to deposit into the account right away. Actually, it is a good idea to apply even if you do not have any money to deposit into the account – this will make sure that the CESG is already set up if you are able to deposit savings in the account in the future.
I have more questions. Where do I go for help?
Come to one of our in-person workshops, or book a personal appointment with one of our
Financial Empowerment Counsellors.
Other resources for information:
1 800 O-Canada (1-800-622-6232)
Visit a Service Canada Centre near you