RESP (Registered Education Savings Plan)
A tax-deferred account for funding a child’s post-secondary education, with a government grant on top.
The RESP has a $50,000 lifetime contribution limit per beneficiary, with no annual cap. Contributions are not deductible, but growth is tax-sheltered and educational withdrawals are taxed in the student’s hands (usually at little to no tax). The big draw is the Canada Education Savings Grant, which adds 20% on the first $2,500 contributed per year, up to $500 annually and $7,200 lifetime per beneficiary. Lower-income families also qualify for the Canada Learning Bond. If the child does not pursue post-secondary, contributions come back tax-free, but grants must be returned and growth is taxed at your marginal rate plus a 20% penalty.
A 60-second lesson that puts this term in context, alongside the others, lives inside the Finlo app.