Canada Education Savings Grant (CESG)

Through the Canada Education Savings Grant, the Government of Canada will contribute an additional 20%* to the RESP on the first $2,500 deposited each year, through the Canada Educations Savings Grant. However, for families with low to moderate incomes, the grant amount is higher on the first $500 contributed:

40% if family income is under $37,178
30% if family income is $37,178 - $74,357
20% if family income is over $74,357

Accumulated investment income earned from RESP deposits is tax free until the funds are withdrawn. Withdrawals can be used to cover any reasonable education expenses such as books, supplies, tuition or living expenses. Funds withdrawn are taxed in the name of the beneficiary. Typically, the student has little other income and therefore will pay little, if any, income tax on the investment income.

*A higher rate is available for modest income families.