Through the CESG, the federal government adds 20 per cent to the first $2,500 of annual contributions made to all RESPs of an eligible beneficiary for a maximum grant of $500 per year (subject to limitations).
How does it work?
The CESG is available each year until the end of the year in which the beneficiary turns 17. The total grant payments to a beneficiary cannot exceed $7,200 over the life of all RESPs for the beneficiary. Any unused CESG grant room can be carried forward to future years.
Who qualifies for the CESG?
To qualify for the CESG, the following conditions must be met:
- The beneficiary must be under the age of 18 (no later than the calendar year they turn 17 years of age
- The beneficiary must be a Canadian resident with a valid Social Insurance Number (SIN)
- A minimum contribution of $100 per year, for four years, or total contributions of at least $2,000 must be made prior to the year the beneficiary turns 16. (This condition only applies for the years the beneficiary turns 16 or 17
An additional CESG, a payment over and above the Basic CESG, of either 10 per cent or 20 per cent, on the first $500 contributed each year may be available if the primary caregiver of the RESP beneficiary is a recipient of the Canada Child Tax Benefit. The actual amount of Additional CESG paid is dependent on the net family income of the primary caregiver.
The additional CESG allows you to reach the $7,200 lifetime CESG limit per beneficiary earlier or without having to contribute as much.
Any unused Additional CESG grant room can not be carried forward to future years because it is determined by the primary caregiver’s annual income.
Canada Learning Bond (CLB)
Depending on the primary caregiver’s net income, a child may also qualify for the CLB. The CLB can add up to $2,000 per beneficiary to your RESP.
The CLB is a bond, or grant, of $500 initially plus $100 per year up to age 15 that is available to children born after December 31, 2003, whose primary caregiver is eligible to receive the National Child Benefit Supplement, “commonly known as the “baby bonus” or “family allowance".
An extra $25 will be paid with the initial $500 CLB payment to assist any potential costs with opening an RESP.