A RESP is a Registered Education Savings Plan under Canada Revenue Agency/Human Resources and Skills Development Canada which allows you to save for your child’s post-secondary education. Since an RESP grows with time, it is important to begin saving as early as possible. Almost anyone – a parent, grandparent or friend – can open this type of savings plan in a child’s name. After the child finishes high school and enrolls in some type of post-secondary education, the RESP savings can be used to help offset their study costs. The savings grow tax-sheltered until the savings are used for post-secondary education. Income is taxed in the hands of the beneficiary (typically at a lower tax rate).
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Canada Learning Bond Explained
The Canada Learning Bond, combined with your Registered Education Savings Plan, can be a valuable tool in helping you save for your child’s education. If you qualify for the CLB, you can receive a $500 bond just by opening up a RESP, and an additional $100 per year until your child turns 15. With this kind of incentive, you can start saving immediately for your child’s education.