Canada Education Savings Grants
The Canada Education Savings Grant (CESG) is a special financial incentive for parents, family and friends to save for a child’s post-secondary education.
It provides people who invest in an RESP a Basic CESG amount of 20% on yearly contributions, up to an annual maximum of $500 per eligible child, with a lifetime maximum of $7,200.
However, depending on your family income, your child could receive additional funds in the form of additional CESG:
~ If your net family income is below $44,701†, the grant will be 40% for every dollar on the first $500 you save and 20% of the next $2,000 in your child’s RESP each year. That means you could receive up to $600 in CESG per year.
~ If your net family income is between $44,701† and $89,401†, the grant will be 30% for every dollar on the first $500 you save and 20% of the next $2,000 in your child’s RESP each year. That means you could receive up to $550 in CESG per year.
Family income is not a criteria to receive the Basic CESG of 20% on the first $2,500 of annual contributions in an RESP. No matter which CESG formula you qualify for, the CESG lifetime limit for each child remains $7,200, as you can see from this chart:
Canada Education Savings Grant Summary Chart
(Table will scroll horizontally on small screens)
|Net||Family||Income||$44,701*||< less||$44,701* >||$89,401*||$89,401*||+ over|
To Apply for the Canada Education Savings Grant:
1. Register the birth or adoption of the child.
2. Apply for a birth certificate.
3. Apply for a Social Insurance Number (SIN) for the child. download a SIN application.
4. Open a Registered Education Savings Plan (RESP) .
5. Download the appropriate form for your CESG application
Catching up on Missed Contributions
~ If you opened your RESP in 1998 or later and haven’t collected any grant money yet, you are entitled to a maximum of $400 for each year you missed up to and including the year 2006. Effective January 1, 2007, the maximum entitlement increased to $500 per eligible child per year. These payments are not included in the calculation of your maximum annual contribution amounts.
~ If you can’t make your RESP contributions for one or more years, you’re still entitled to receive CESG payments for those years. For instance, if you stop making RESP contributions for two years and then start contributing again, you’ll be eligible for an amount of CESG that would have been allocated for the years in which the payment was not made. This applies to Basic CESG only; Additional CESG is not carried forward.
~ Please note: for any contributions made before December 31, 2004, you must apply for the Basic CESG no later than December 31, 2007. Any contributions made from January 1, 2005, onward, you must apply for the Basic and/or Additional CESG within three years of the date you made the contributions.
~ CESG payments received and interest on CESG will be paid to the student when he or she enrolls in the second academic level of an eligible post-secondary program.
As always, a representative from Savii Financial Concepts will be happy to explain everything to you.
†This amount is indexed each year based on the rate of inflation.
* Based on 2016 indexation rates. This amount will be indexed to inflation for subsequent taxation years.
** To receive the lifetime maximum CESG of 7,200 per child, you must have contributed a minimum of $2,500 per year for 15 years or a minimum of $2,000 per year for 18 years or used carry-forward room from missed years.