How does an RESP work in Canada?

You contribute to an RESP for your child. The government adds 20% (up to $500/year) via CESG. Investments grow tax-free. When your child goes to school, withdrawals are taxed in their hands (usually low/no tax).

What happens if my child doesn't go to college?

You can transfer to another child, use for graduate studies, or wait (no time limit). Contributions can be withdrawn tax-free. Grants must be repaid. Earnings can be transferred to RRSP (up to $50K) with 20% tax penalty.

RESP Guide Canada 2026: Education Savings with Government Grants

RESPs give you 20-40% free money via government grants, plus tax-free growth. Here’s how to maximize education savings.

RESP Basics

Feature	Details
Contribution limit	$50,000 lifetime per beneficiary
Government grant (CESG)	20% on first $2,500/year
Max CESG per year	$500
Lifetime CESG cap	$7,200
Age limit	Until December 31 of year child turns 31

Government Grants

Canada Education Savings Grant (CESG)

Your Contribution	CESG (20%)
$2,500	$500
$5,000	$500 (cap)
$2,500 × 18 years	$500 × 18 = $9,000 (capped at $7,200)

Additional CESG (Low Income)

Family Income	Extra Grant
Under $55,867	Extra 20% on first $500
$55,867-$111,733	Extra 10% on first $500
Over $111,733	No extra

Maximum with additional CESG: $600/year instead of $500.

Canada Learning Bond (CLB)

Requirement	Details
Income test	Must qualify
First year	$500
Each year to age 15	$100/year
Lifetime maximum	$2,000
Contribution required	None

CLB is free money — no contribution needed, just open an RESP.

Grant Example by Income

$100,000 Family Income

Year	Contribution	CESG
1	$2,500	$500
2	$2,500	$500
…	…	…
14.4	$2,500	$200 (cap reached)
Total	$36,000	$7,200

$40,000 Family Income

Year	Contribution	CESG	Additional CESG	Total Grant
1	$500	$100	$100	$200
1+	$2,000	$400	—	$400
Total (yr 1)	$2,500	$500	$100	$600

Plus CLB: $500 + $100/year = up to $2,000 more.

Catch-Up Rule

Missed years? You can claim grant catch-up:

Situation	Catch-Up
Prior year CESG unused	Can claim extra $500
Max catch-up per year	$1,000 CESG total (on $5,000)
Years available	From birth or 2007

Example: Child is 5, never contributed. Can contribute $5,000 and get $1,000 CESG.

RESP Types

Type	Best For
Individual RESP	One beneficiary
Family RESP	Multiple children
Group RESP	Pooled plans (less flexible)

Family RESP Benefits

Feature	Details
Share between kids	Yes
One child uses more	Allowed
Rollover	Easy between siblings

Recommendation: Family RESP for flexibility.

Investment Options

Investment	Risk	Returns
GICs	Low	3-5%
Balanced funds	Medium	5-7%
Equity funds	Higher	7-10%
Target-date funds	Adjusting	5-8%

Age-Based Strategy

Child’s Age	Allocation
0-8	80% equity, 20% bonds
9-14	60% equity, 40% bonds
15-17	40% equity, 60% bonds
18+	80-100% safe

RESP Growth Example

$2,500/year for 18 years, 6% return:

Component	Amount
Your contributions	$45,000
CESG (20%)	$7,200
Investment growth	$42,000
Total	$94,200

$45,000 invested → $94,200 available for education.

Withdrawal Rules

Types of Withdrawals

Type	What It Includes	Tax
PSE (Post-Secondary)	Contributions	Tax-free (your money)
EAP (Educational Assistance)	Grants + Growth	Taxed to student

EAP Limits

Period	Maximum EAP
First 13 weeks	$8,000
After 13 weeks	No limit

What Counts as Eligible

Eligible	Examples
University	Full-time, part-time
College	CEGEP, community college
Trade school	Apprenticeship programs
Studies abroad	Many qualify

If Child Doesn’t Go to School

Option	Details
Wait	No time limit
Transfer to sibling	Keep grants
Use for graduate school	MBA, Masters, etc.
Return CESG	Pay back grants
Transfer to RRSP	Up to $50K (if you have room)
Withdraw earnings	20% penalty + income tax

Contributions always returned tax-free — it’s your money.

RESP Providers

Banks

Provider	Fees
TD	$0-$100/year
RBC	$0-$100/year
BMO	$0-$100/year

Online Brokerages

Provider	Fees
Questrade	$0 ETF purchases
Wealthsimple	0.4-0.5%

Robo-Advisors

Provider	Fees
Wealthsimple	0.4-0.5%
Questwealth	0.2-0.25%

Group RESPs (Avoid)

Issue	Problem
High fees	2-4%
Rigid rules	Penalties for changes
Less flexible	Limited investment choices

Recommendation: Self-directed or robo-advisor.

Opening an RESP

Requirements

Requirement	Details
SIN for child	Yes (apply at birth)
Your SIN	Yes
Child’s birth certificate	For verification
Bank account	For contributions

Steps

Get child’s SIN
Choose provider
Open RESP
Start contributions
Grants applied automatically

Contribution Strategies

Lump Sum vs Monthly

Strategy	Pros	Cons
$2,500 annually (Jan)	Max time in market	Larger commitment
$208/month	Easier budgeting	Slightly less growth

Grandparent Contributions

Option	Details
Contribute to parent’s RESP	Most flexible
Open own RESP	You control
Give to parents	They decide

Common Mistakes

Mistake	Solution
Group RESP	Use individual/family
Missing CESG	Contribute $2,500/year
Waiting to start	Open at birth
Wrong investments	Match to child’s age
No catch-up	Use carry-forward

Bottom Line

Action	Timing
Open RESP	At birth
Annual contribution	$2,500 (get $500 CESG)
Catch up missed years	$5,000/year (get $1,000)
Adjust investments	As child ages
Start withdrawals	When enrolled

Key tips:

Start immediately — time is biggest factor
$2,500/year = maximum annual grant
Use catch-up if you missed years
Avoid group RESPs — use family or individual
Conservative investments as school approaches
Tax is minimal — students have low income

Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.

The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy