One of the best ways to invest in your child’s future
An RESP is a registered savings plan that can help you save for your child’s university or college education. The savings within your RESP grow tax-free until withdrawn. Even better, the federal government will match a percentage, subject to certain limits, of every eligible contribution made by you, the plan subscriber.
It’s never too late to get started, and a contribution every month, no matter how small, can add up quickly. Saving for your child’s education through a Scotia iTRADE RESP can also be a family affair; grandparents, aunts, uncles and even friends can open an account, contribute to the same child and be the subscriber† to an RESP plan.
With Scotia iTRADE, you have a range of RESP-eligible investments from which to choose. In fact, any investment that’s eligible for your RRSP is also eligible for an RESP – from equities to mutual funds, Exchange Traded Funds (ETFs) and cash.
Pop Quiz: How much does a post-secondary education cost?
A full-time student in Canada paid an average of $16,000 for post-secondary schooling in 2014-15. That’s more than $66,000 for a four-year program.* An RESP is a smart way to provide one of the greatest gifts to your child and protect your own nest egg.
Unlike an Individual Plan, which has only one beneficiary, a Family Plan lets you name more than one child as beneficiary. That way, if the primary beneficiary doesn’t pursue a post-secondary education, a sibling can take advantage of the funds. See below for the key differences between the two plans.
- A single beneficiary
- Beneficiary does not have to be related to the subscriber
- Beneficiary can be of any age
- Contributions to the plan must generally stop at the 31st year after the end of the year the RESP was opened
- Generally, the plan must be closed by the end of the 35th year after the year the plan was opened
- Eligible beneficiaries can replace existing beneficiaries as long as they are not 21 years of age or older
- Multiple beneficiaries are allowed in this plan
- Beneficiaries must be related by blood or adoption to the subscriber
- Beneficiary must be less than 21 years of age, except in certain circumstances
- Contributions must be made in respect of individual beneficiaries
- Contributions to the plan must stop at the earliest of the date that the beneficiary turns 31 years of age, or the 31st year after the end of the year the RESP was opened
- Generally, the plan must be closed by the end of the 35th year after the year the plan was opened
- Eligible beneficiaries can replace existing beneficiaries as long as they are not 21 years of age or older
RESPs at a glance
- Grows tax-free savings
- Enables you to take advantage of generous government grants
- Maximum lifetime contribution limit of $50,000 per child/beneficiary for all their RESPs combined together
- Funds can be withdrawn as needed, and can be used for tuition, books, computers, transportation, or housing
- Grants and investment returns are taxed to the child/beneficiary at their applicable income tax rate
U.S.-Friendly** Registered Education Savings Plans (RESPs)
For a flat fee of $30 per calendar quarter per account, enrollment in a U.S.-Friendly RESP allows you to save for your child’s education, while taking advantage of trading U.S. denominated securities, without paying a retail foreign exchange spread** in your Canadian denominated registered account.
Don’t forget to take advantage of government grants
In addition to growing your RESP savings tax-free, the Government of Canada offers you grants to help fund your child’s education:
- Canada Education Savings Grant (CESG)
- The Canada Learning Bond (CLB)
For more information on these grants, please consult the Canada Revenue Agency website.
For more information
This general description of our registered products is provided to you for informational purposes only and is not intended to be and should not be construed as tax advice or any other investment advice of any kind. Scotia iTRADE does not provide investment advice or recommendations of any kind, including tax advice. Individual circumstances will influence your investment decisions and you should consult with your own tax and investment advisor.
Government of Canada: “Cost of post-secondary education” https://www.canada.ca/en/employment-social-development/programs/post-secondary/cost.html.
For trades in U.S. securities in Scotia iTRADE's U.S.-Friendly Canadian dollar registered accounts on a single trading day, the foreign currency component will be transacted at the single, benchmark, mid-market rate used by Scotia Capital Inc. to price its holdings of US/Canadian dollar currencies at the end of that trading day (SCI Rate). Scotia iTRADE will not apply its retail "mark-up" or spread over and above the SCI Rate to the foreign currency component of the trade. Only trades in U.S. securities in the U.S.-Friendly registered accounts will be given this preferential foreign exchange rate. A quarterly fee of $30 (plus applicable taxes) per registered account per calendar quarter applies. For important information on foreign exchange transactions, log on to Scotia OnLine, click ‘Help’ and search for "Converting Funds Between Currencies through Scotia iTRADE" in the Help section.
Under the Income Tax Act, your blood relations are your children, other descendants (such as grandchild or a great grandchild) and your brothers or sisters. Nieces, nephews, aunts, uncles or cousins are not considered to be related by blood).