BMO Nesbitt Burns
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Winnipeg, MB
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RESP Contributions

What is an RESP?

An RESP is a Registered Education Savings Plan. It allows a contributor to the plan (the 'subscriber') to save money - tax deferred - until the funds are needed to pay for a child's (the "beneficiary’s”) post-secondary education.

With the Canada Education Savings Grant (CESG), the federal government has made a commitment to help families who are saving for a child's post-secondary education. The federal government can contribute an additional 20% of your annual contribution, up to a maximum of $500 per calendar year per eligible child, up to the end of the calendar year in which the child turns 17 years of age.

In addition to the Basic CESG, the beneficiary may also be entitled to receive Additional CESG, Canada Learning Bond (CLB) or Alberta Centennial Educations Savings (ACES) grant if certain conditions and requirements are met.

A Registered Education Savings Plan (RESP) is a tax deferral plan intended to encourage saving for post-secondary education.

RESP contributions are not tax deductible. However, income generated by the contributions is tax sheltered.

Canada Revenue Agency (CRA) regulations state that RESP contributions belong to the subscriber. Contributions to an RESP account from an In Trust For account is a breach of trust and is therefore not permitted.

Canada Savings Bonds must be registered in the name of the subscriber to complete the contribution.

RESP Restrictions

The following restrictions apply:
  • With all plans, maximum lifetime contribution is $50,000 per beneficiary.

  • The maximum annual contribution per beneficiary which is eligible for the 20% Canada Education Savings Grant (CESG) is $2,500.

  • Multiple beneficiaries are allowed (family plan only).

  • Joint subscribers are allowed only if the joint subscriber is a spouse.

  • Contribution cut-off date is December 31 for regular contributions.

  • The same investments allowed for RRSPs are allowed for RESPs.

  • Excess contributions to an RESP are subject to a 1% penalty per month.

  • Wealth Administrator Program (WAP) and the Pre-Authorized Cheque Program (PAC) cannot be set up for RESP accounts.
RESP Requirements

To receive a grant the following is required:
  • Beneficiaries must have a valid Social Insurance Number (SIN).

  • Beneficiaries SIN information must be included on all RESP applications.

  • Subscriber(s) SIN information must be included on all RESP applications.

  • Without a valid SIN, RESP plans will not be registered with CRA and income generated will not be sheltered (i.e., generated income will be reported to CRA).
RESP Family Plan

Beneficiaries in an RESP family plan must be related to the subscriber by blood or adoption and must be under the age of 31.

Contributions to both family and individual plans must be allocated to specific beneficiaries.

RESP Non-Family Plan

Only one beneficiary at any time is allowed for an RESP non-family plan. The beneficiary does not have to be related to the subscriber and may be over 31 years of age.

Contributions can be made up to and including the 31st year of the plan's existence (but will not be eligible for the grant for the years in which the beneficiary is age 18 or older).

Age 16 and 17 Beneficiaries

Beneficiaries at age 16 and 17 must meet at least one of the following conditions to be eligible for a Canada Education Savings Grant (CESG):

A minimum contribution of $2,000 must be made and not withdrawn from the RESP in respect of the beneficiary before the calendar year in which the beneficiary turns 16.
A minimum of $100 in annual contributions must be made to and not withdrawn from the RESP in respect of the beneficiary in any 4 years before the year in which the beneficiary turns 16.

Impact of Changing the Named Beneficiary

When a beneficiary under an RESP is replaced by another beneficiary, contributions previously made will be considered to have been made for the new beneficiary. The contributions previously made will be included in determining the annual and lifetime contributions limits for the new beneficiaries.