Canada education savings grant (cesg)

The Canada education savings grant program, announced in the 1998 federal budget, I intended to create a further incentive for taxpayers to save through RESPsby providing a direct federal grant to any valid RESP equal to 20% of the first $2,500 per year contributed for each child under 18 years of age. Grants are limited to a specified annual amount. (There is also an overall lifetime maximum of $7,200 of grants for each beneficiary of an RESP.) The grant itself is not included in calculating the lifetime RESP contribution limit, nor in calculating annual contribution limits (before annual contribution limits were withdrawn in 2007). www.insuranceplancanada.com

If contributions are withdrawn for non – educational purposes from an RESP which has received a CESG, the RESP trustee will be required to make a CESG repayment equal to 20% of the withdrawal. Where a plan contain both contribution which did and contributions which did not earn CESG ( because they were before 1998 or in excess of grant contribution room), the CESG earning contributions will be considered withdrawn first; that is, the 20% repayment will be required on withdrawal until theCESG is, in effect, exhausted.

Grant repayment will also be required where a payment of RESP income is made for non – educational purposes, where a beneficiary is replaced (except by a sibling or a beneficiary related to the subscriber by blood or adoption), and where a plan is terminated or revoked. Repayments may also be required on transfers between plans.

Grants will not be earned for "family plans" unless the plan provides that no beneficiary 21 or older may be added (as all new plans must provide after 1998). Similarly, grants will not be allowed after 1998 to plans unless they provide that educational assistance payments in respect of courses of less than months do not exceed the cost of tuition plus $300 per week of study (as all new plans must provide). www.insuranceplancanada.com

The Canada education savings grant program, announced in the 1998 federal budget, I intended to create a further incentive for taxpayers to save through RESPsby providing a direct federal grant to any valid RESP equal to 20% of the first $2,500 per year contributed for each child under 18 years of age. Grants are limited to a specified annual amount. (There is also an overall lifetime maximum of $7,200 of grants for each beneficiary of an RESP.) The grant itself is not included in calculating the lifetime RESP contribution limit, nor in calculating annual contribution limits (before annual contribution limits were withdrawn in 2007). www.insuranceplancanada.com

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