Accounts & Tax · Education saving

RESPs for parents and grandparents in Canada

Q: How much should I contribute to an RESP each year?

For most families the sweet spot is $2,500 per child, per year . That captures the full $500 basic CESG — a guaranteed 20% top-up before the money even grows. You can contribute more (there’s no annual contribution limit, only a $50,000 lifetime cap per child), but contributions above $2,500 in a year don’t earn extra basic grant. If you missed past years, you can carry forward one year of room and put in up to $5,000 to grab up to $1,000 of grant.

Q: What is the CESG and how much can I get?

The Canada Education Savings Grant is the government matching 20% of your RESP contributions, up to $500 a year on the first $2,500 you put in. Over the life of the plan the basic grant maxes out at $7,200 per child . Lower- and middle-income families get an Additional CESG of 10–20% on the first $500 contributed each year on top of that. Grant is generally available until the end of the year the child turns 17 (with special rules for 16–17-year-olds).

Q: Can grandparents open or contribute to an RESP?

Yes. A grandparent can open their own RESP with the grandchild as beneficiary, or simply contribute to the plan the parents already own . One important catch: the $50,000 lifetime limit and the grant room are per-child across all plans combined . If both the parents and a grandparent are contributing, coordinate the amounts — otherwise you can accidentally over-contribute and trigger a 1%-per-month penalty.

Q: Are RESP contributions tax-deductible?

No. Unlike an RRSP , RESP contributions are not deductible from your income. The tax advantages are different: your money grows tax-sheltered inside the plan, the government adds grants , and when the money comes out the growth and grants are taxed in the student’s hands — typically at little or no tax because students have low income and tuition credits.

Q: What happens if my child doesn’t go to post-secondary?

You have options and time — a plan can stay open up to 35 years . First, a sibling can often use the money (especially in a family plan). If no one attends, the grants are returned to the government , but you always get your own contributions back tax-free . The investment growth can be moved into your (or a spouse’s) RRSP — up to $50,000 if the plan is 10+ years old, the beneficiary is 21+, and you have RRSP room. Otherwise it comes out as an AIP , taxed at your marginal rate plus a 20% penalty.

Q: How are RESP withdrawals taxed?

It depends which bucket the money comes from. Educational Assistance Payments (EAPs) — the grants plus growth — are taxed in the student’s hands , which usually means little or no tax. A refund of your own contributions comes out tax-free at any time. In the first 13 weeks of full-time study, EAP withdrawals are capped at $8,000 ; after that there’s no limit.

Q: What is the Canada Learning Bond?

The Canada Learning Bond (CLB) is extra money for children in lower-income families — and it requires no contribution at all . It pays $500 in the first eligible year and $100 a year after that , up to a $2,000 lifetime maximum. You just have to open an RESP and apply; it can even be claimed retroactively up to age 20.

Q: What’s the lifetime contribution limit for an RESP?

The lifetime limit is $50,000 per beneficiary , combined across every RESP that names that child. There’s no annual contribution limit — only the grant is capped each year — so you could deposit a lump sum, though spreading contributions out captures more CESG. Going over $50,000 triggers a 1% per month penalty on the excess until it’s withdrawn.

An RESP is the best deal in Canadian saving: the government matches 20% of what you put in, the growth is tax-sheltered, and the money is taxed in your child’s low-income hands on the way out. Here’s how the grants, limits, and withdrawals actually work.

The short answer

Sweet spot$2,500/yr per child — earns the full $500 CESG
Free grant20% match — up to $7,200 lifetime per child
Lifetime cap$50,000 contributions per child (no annual limit)
Tax on exitStudent’s hands — usually little or none

Project your RESP growth

How an RESP works

A Registered Education Savings Plan is a tax-sheltered account built for one job: funding a child’s post-secondary education. You contribute (the contributions aren’t tax-deductible), the government layers grants on top, and everything grows without tax inside the plan. The grants are what make an RESP unbeatable — there’s simply no other Canadian account that hands you free matching money:

Grant	What you get	Who qualifies
Basic CESG	20% match, up to $500/yr	Every child (to $7,200 lifetime)
Additional CESG	Extra 10–20% on first $500	Lower- & middle-income families
Canada Learning Bond	Up to $2,000 — no contribution needed	Lower-income families
BCTESG (BC)	$1,200 one-time	BC residents, child born 2006+
QESI (Quebec)	10% match, up to $250/yr	Quebec residents

BCTESG and QESI are provincial add-ons; Saskatchewan’s SAGES has been suspended since 2018. Always confirm current provincial programs, since they change.

The CESG: free government money

The Canada Education Savings Grant (CESG) is the heart of the RESP. Ottawa matches 20% of your contributions, up to $500 a year on the first $2,500 you put in. That’s a guaranteed 20% return before the market does anything. The catch is that the grant is capped annually, so you can’t make up for lost years all at once:

Contribute $2,500 a year → $500 CESG (20%). Keep going until you’ve contributed $36,000 and you collect the full $7,200 lifetime grant.

If you fall behind, you can carry forward one year of unused room — contributing up to $5,000 in a catch-up year to claim up to $1,000 of grant. Lower- and middle-income families also receive Additional CESG of 10–20% on the first $500 contributed each year. This is why starting early and contributing steadily matters so much: the $500-a-year ceiling rewards time, not last-minute lump sums.

The Canada Learning Bond — no contribution needed

For lower-income families, there’s money on the table that requires no contribution at all. The Canada Learning Bond (CLB) deposits $500 in the first eligible year and $100 a year after that, up to a $2,000 lifetime maximum per child. You don’t have to put in a single dollar of your own — you simply open an RESP and apply, and it can even be claimed retroactively up to age 20. It’s one of the most underclaimed benefits in the country.

Contribution limits and the $50,000 cap

There is no annual contribution limit on an RESP — only the grant is capped each year. What is capped is the lifetime total: $50,000 per child, combined across every RESP that names that child. Go over and the excess is taxed 1% per month until you take it out.

The $50,000 limit and the grant room are per beneficiary, across all plans. If parents and a grandparent are both contributing for the same child, coordinate the amounts — it’s easy to blow past the cap by accident and trigger penalties when no single person is tracking the total.

See how grants plus growth compound

$2,500 a year, a $500 grant on top, and decades of tax-free growth add up fast. Run the numbers.

Compound interest calculator RRSP vs TFSA guide

Getting the money out: EAP vs your contributions

When the child enrols in a qualifying program, money comes out in two distinct buckets — and they’re taxed very differently:

Withdrawal type	What it is	How it’s taxed
EAP	Government grants + investment growth	Taxed in the student’s hands — usually little or no tax
Refund of contributions	Your own principal coming back out	Tax-free, any time

EAP withdrawals are capped at $8,000 in the first 13 weeks of full-time study; after that there’s no limit. A common strategy is to draw the taxable EAP money first while the student’s income (and tax rate) is lowest.

What if your child doesn’t go to school?

Plans don’t expire for decades, so a gap year or a change of heart isn’t a crisis. An RESP can stay open up to 35 years, and in a family plan a sibling can use the money. If ultimately no one attends, you still get all of your own contributions back tax-free — only the grants are returned to the government.

The investment growth is the part to plan for. You can roll up to $50,000 into your or a spouse’s RRSP if the plan is 10+ years old, the beneficiary is 21+ and not in school, and you have RRSP room. Otherwise it comes out as an Accumulated Income Payment (AIP), taxed at your marginal rate plus a 20% penalty — so the RRSP route is almost always better.

What to do — and what to avoid

Most RESP mistakes come down to leaving grant money behind or accidentally over-contributing. Keep these in mind:

Do this

Contribute at least $2,500 a year per child to capture the full $500 CESG — an instant 20% return on that money.
Start early — the CESG is capped at $500 a year, so you can’t cram in $36,000 at the end and still collect the full $7,200.
If you’re behind, use the carry-forward: up to $5,000 in a catch-up year grabs up to $1,000 of grant.
Open a family plan if you have more than one child so grants and growth can be shared between siblings.
Coordinate with grandparents so total contributions stay within the $50,000 per-child lifetime limit.

Avoid this

Don’t contribute past $50,000 per child — the excess is taxed 1% per month until you withdraw it.
Don’t leave free money on the table — skipping the CESG match is the single most expensive RESP mistake.
Don’t assume contributions are tax-deductible — unlike an RRSP, they aren’t; the payoff is tax-sheltered growth plus grants.
Don’t pull out your own contributions before the child enrols if you can avoid it — it can force you to repay CESG.
Don’t panic if school is delayed — a plan can stay open up to 35 years, and growth can often roll into your RRSP.

A worked example: the Patels start early

Numbers make it concrete. The Patels open a family RESP when their daughter Priya is born and contribute $2,500 every year like clockwork. Each year, the CESG adds another $500.

The grant: by contributing $2,500 annually for about 14–15 years, the Patels reach $36,000 in contributions and collect the full $7,200 of CESG — every dollar of free government money available.

The growth: with the contributions and grants invested in a low-cost portfolio earning roughly 6% a year, the plan grows to somewhere around $75,000+ by the time Priya turns 18 — far more than the $36,000 they put in, thanks to the grant boost and tax-sheltered compounding.

The exit: when Priya starts university, the grants-and-growth portion is paid to her as EAPs and taxed in her hands. Because she’s a student with low income and tuition credits, she pays little or no tax — and the Patels get their own contributions back tax-free.

The lesson isn’t the exact figure — it’s the structure. Starting at birth and contributing steadily captures every grant dollar and gives compounding the maximum runway. A family who waits until the child is 12 simply can’t collect the same $7,200, because the grant is capped each year.

Frequently asked questions

How much should I contribute to an RESP each year?

For most families the sweet spot is $2,500 per child, per year. That captures the full $500 basic CESG — a guaranteed 20% top-up before the money even grows. You can contribute more (there’s no annual contribution limit, only a $50,000 lifetime cap per child), but contributions above $2,500 in a year don’t earn extra basic grant. If you missed past years, you can carry forward one year of room and put in up to $5,000 to grab up to $1,000 of grant.

What is the CESG and how much can I get?

The Canada Education Savings Grant is the government matching 20% of your RESP contributions, up to $500 a year on the first $2,500 you put in. Over the life of the plan the basic grant maxes out at $7,200 per child. Lower- and middle-income families get an Additional CESG of 10–20% on the first $500 contributed each year on top of that. Grant is generally available until the end of the year the child turns 17 (with special rules for 16–17-year-olds).

Can grandparents open or contribute to an RESP?

Yes. A grandparent can open their own RESP with the grandchild as beneficiary, or simply contribute to the plan the parents already own. One important catch: the $50,000 lifetime limit and the grant room are per-child across all plans combined. If both the parents and a grandparent are contributing, coordinate the amounts — otherwise you can accidentally over-contribute and trigger a 1%-per-month penalty.

Are RESP contributions tax-deductible?

No. Unlike an RRSP, RESP contributions are not deductible from your income. The tax advantages are different: your money grows tax-sheltered inside the plan, the government adds grants, and when the money comes out the growth and grants are taxed in the student’s hands — typically at little or no tax because students have low income and tuition credits.

What happens if my child doesn’t go to post-secondary?

You have options and time — a plan can stay open up to 35 years. First, a sibling can often use the money (especially in a family plan). If no one attends, the grants are returned to the government, but you always get your own contributions back tax-free. The investment growth can be moved into your (or a spouse’s) RRSP — up to $50,000 if the plan is 10+ years old, the beneficiary is 21+, and you have RRSP room. Otherwise it comes out as an AIP, taxed at your marginal rate plus a 20% penalty.

How are RESP withdrawals taxed?

It depends which bucket the money comes from. Educational Assistance Payments (EAPs) — the grants plus growth — are taxed in the student’s hands, which usually means little or no tax. A refund of your own contributions comes out tax-free at any time. In the first 13 weeks of full-time study, EAP withdrawals are capped at $8,000; after that there’s no limit.

What is the Canada Learning Bond?

The Canada Learning Bond (CLB) is extra money for children in lower-income families — and it requires no contribution at all. It pays $500 in the first eligible year and $100 a year after that, up to a $2,000 lifetime maximum. You just have to open an RESP and apply; it can even be claimed retroactively up to age 20.

What’s the lifetime contribution limit for an RESP?

The lifetime limit is $50,000 per beneficiary, combined across every RESP that names that child. There’s no annual contribution limit — only the grant is capped each year — so you could deposit a lump sum, though spreading contributions out captures more CESG. Going over $50,000 triggers a 1% per month penalty on the excess until it’s withdrawn.

This guide is for educational purposes only and is not financial, investment, or tax advice. The worked example is hypothetical and figures are illustrative. Grant rates, income thresholds, and contribution rules change — always confirm current figures with canada.ca or your RESP provider before acting, and consider your own situation or a qualified advisor. See our RRSP vs TFSA guide and compound interest calculator for related reading.