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Registered Education Savings Plan (RESP) at a Glance

12.04.25 // Tax Planning // Article //

Planning for a child’s future education? A Registered Education Savings Plan (RESP) is a smart and supportive way to start saving early. It is a government-registered account designed to help families set aside money for post-secondary education. While your contributions are not tax-deductible, the investment growth is tax deferred—and best of all, government grants can give your savings a meaningful boost.

Key Benefits

  • Government grants: The Canada Education Savings Grant (CESG) adds 20% on the first $2,500 contributed each year per child (up to $500 annually; $7,200 lifetime).
  • Canada Learning Bond (CLB): Provides up to $2,000 per child for eligible low-income families.
  • Tax-efficient withdrawals: Contributions are withdrawn tax-free; grants and investment growth are included in Educational Assistance Payments (EAPs) and taxed in the student’s hands, typically at a very low rate.

Who Can Open & Use an RESP?

  • Subscribers: Adults, including parents, grandparents, relatives or friends. Must be Canadian residents.
  • Beneficiaries: A child or an adult named to receive the funds for post-secondary education. Must reside in Canada at the time the account is opened and have a SIN.
  • You can set up with one or multiple beneficiaries (e.g. individual plan vs family plan).

Eligible Expenses Using RESP

RESP savings and benefits can be used to pay for education-related costs associated with a beneficiary’s part-time or full-time enrollment in an eligible university, college or other educational institution within Canada or abroad, including:

  • Tuition fees, textbooks, and tools
  • Transportation and rent

Contribution Rules

  • Lifetime limit: $50,000 per beneficiary — this is the maximum lifetime contribution limit across all RESPs combined (excluding government grants and investment growth).
  • Annual contributions: No set limit, but to maximize the Canada Education Savings Grant (CESG)—which matches 20% of contributions—you should contribute $2,500 per year. This yields the full $500/year grant, with a lifetime grant cap of $7,200 per beneficiary, plus potential additional amounts for lower-income families.
  • Plan duration: You can make contributions for up to 31 years from the day the RESP was opened, and you have up to 35 years to use the funds in the plan. 

Growth, Withdrawals & Tax

  • Growth: Earnings grow tax-deferred inside the RESP.
  • Withdrawals:
    • Educational Assistance Payments (EAPs: grants + growth are taxed to the student often at minimal tax rates).
    • Contributions: Withdrawn and returned to the subscriber tax-free at any time.
  • If the beneficiary does not pursue post-secondary education:
    • Contributions are returned tax-free, grants are repaid to the government, and unused growth may be taxable (with limited transfer options such as transferring the RESP to another child).
    • Unused RESP funds can be transferred to an RRSP on a tax-free basis up to a maximum amount of $50,000 if certain conditions are met.

Quick Tips

  • CESG eligibility ends at the end of the calendar year the beneficiary turns 17.
  • Over-contributions above $50,000 are penalized at 1% per month until corrected.
  • RESPs can hold a range of investments: GICs, mutual funds, ETFs, stocks, and bonds.

Additional Considerations

  • If the RESP beneficiary becomes a non-resident of Canada, new contributions cannot be made and government grants cannot be received.
  • If you are a U.S. person (i.e. a U.S. citizen, green card holder or U.S. resident) there are additional tax implications that you should be aware of as the IRS does not recognize the tax-free nature of RESP accounts. Speak with your tax advisor to determine if holding an RESP is right for you.

To see how much you could save, check out the Raymond James Tax Benefits of an RESP calculator to estimate your potential tax savings and government grants.

Securities-related products and services are offered through Raymond James Ltd. (RJL), regulated by the Canadian Investment Regulatory Organization (CIRO) and a Member of the Canadian Investor Protection Fund. RJL financial/investment advisors are not tax advisors, and we recommend that clients seek independent advice from a professional advisor on tax-related matters. Insurance products and services are offered through Raymond James Financial Planning Ltd., which is not regulated by CIRO and is not a Member of the Canadian Investor Protection Fund. Solus Trust Company (“STC”) is an affiliate of Raymond James Ltd. and offers trust services across Canada. STC is not regulated by CIRO and is not a Member of the Canadian Investor Protection Fund.

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