January 2022 – 10 min read
The CESG is one of many government benefitsOpens in a new window available to eligible parents in Canada.
This grant is deposited into a registered education savings plan (RESP) to help parents pay for post-secondary education.
The CESG is money the federal government adds to a RESPOpens a new website in a new window to help with the costs of post-secondary education.
This money can help pay tuition fees for full-time or part-time education for students enrolled in university, college, trade school, or an apprenticeship. It can also be used to help students attending CÉGEP colleges in Quebec.
There are 2 grants available – the Basic CESG, and the Additional CESG.
To start, you must have an open RESP and you must be making contributions to it. This is where the government will deposit the CESG contribution. To be eligible for the Basic CESG, a child must:
- Be a resident of Canada
- Have a valid Social Insurance Number (SIN)
- Be named as an RESP beneficiary
Children from a middle- or low-income family may qualify for the additional amount of CESG. Eligibility will depend on the adjusted income level of the child’s primary caregiver and could mean that an extra 10% or 20% is added to the first $500 contributed each year.
Children are eligible to receive the CESG until the end of the calendar year they turn 17. If a child is nearing 16 or 17 - and therefore reaching the end of their eligible savings time - there are some specific requirements that must be met to receive the CESG.
These children may be eligible to receive it if they meet at least 1 of the following conditions before the end of the calendar year that they turn 15:
- A minimum contribution of $100 a year is made to the RESP in any 4 previous years, and is not withdrawn
- At least $2,000 is contributed to the RESP, and is not withdrawn
The CESG adds 20% to your RESP contributions each year. The maximum amount of your contributions the CESG will add to annually is $2,500, which means the CESG can add a maximum of $500 to your RESP each year. There is also a lifetime CESG limit of $7,200 that you can receive.
If you qualify to receive the Additional CESG, the government will use your adjusted income (AI) from your tax return to work out how much you could receive. For 2021, the adjusted income rates are:
- Up to $100 for AI of $49,020 or less
- Up to $50 for AI that’s over $49,020, but not higher than $98,040
The AI amounts are adjusted each year, so you should make sure to check the government websiteOpens a new website in a new window to see what you could potentially receive.
You need to apply to receive the CESG through your RESP provider. If your application is successful, this is also where the government will pay the grant. If you don’t currently have an RESP, you’ll need to open oneOpens in a new window before you can start your application, and you must be actively contributing to it to receive the CESG.
If your child doesn’t want to pursue post-secondary educationOpens in a new window, there are some options for the money that’s been accrued in their RESP.
Firstly, this account can stay open for 35 years, at which point the funds must be used and the RESP must be closed. If at this point your child hasn’t used the funds to pay for school, the amount contributed will be returned to the subscriber, and the CESG contributions will be returned to the Government of Canada.
In terms of any interest accrued, this can be paid to the subscriber (and taxed) or transferred into their Registered Retirement Savings Plan (RRSP)Opens in a new window. This can also be paid into their spouse’s RRSP. Other options include transferring to a child’s Registered Disability Savings Plan,Opens a new website in a new window or gifting the money to a designated educational institutionOpens a new website in a new window.
You can find out more about what happens when you close your RESP from your provider, or from the Canada Revenue AgencyOpens a new website in a new window.
While your child’s education after high school may seem like a long way off, the sooner you begin contributing to an RESP and looking at other ways of saving for your child’s education, the more prepared you’ll be financially when the time comes.
In addition to the CESG, you may qualify to receive other government benefitsOpens in a new window that can help with the cost of raising a family.
Speaking to your advisorOpens in a new window can help you see how the CESG might play a part in your wider financial plan.
The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.
October 21, 2019