Put money away each year to ensure your child will have funds available for college.
A great way to save for a child’s education is to set up a Registered Education Savings Plan (RESP) through the Federal Government.
There are many types of RESPs, including individual, family and group plans that allow a RESP to be set up where one or more children are listed as beneficiaries. It's also important to note that anyone can contribute to a RESP, not just the parents of the child.
While they're not tax-deductible like RRSPs, RESPs do offer some tax benefits.
Interest earned on a RESP is tax-free and when the child starts using the money for school, only the accumulated interest is taxable as income.
The earlier you start putting money toward a child's RESP, the more they will benefit from the available annual government grants and tax-free interest. If the child does not choose to attend a post-secondary institution, there are other ways to put that money to use.
Receive up to $7,200 from a Canada Education Savings Grant.
One of the biggest incentives to start a RESP is the Canada Education Savings Grant. You can receive a grant of 20% from the government on the first $2,000 of your annual investment. This equates to an extra $400 each year, up to a lifetime maximum of $7,200 into the RESP from government grants.
British Columbia Training and Education Savings Grant
The British Columbia Training and Education Savings Grant (BCTESG) was introduced in 2013 and provides a $1,200 grant from the Government of British Columbia to an eligible child’s RESP. Unlike other grants, you do not need to contribute any money to receive the funds—all you have to do is open a RESP! To be eligible for the BCTESG, the child must be born in 2006 or later and named a beneficiary of an existing RESP. The parents or guardians and the child must be residents of the Province of British Columbia.