Parents dream of being able to offset some or all of the costs of a post-secondary education for their kids. This dream has become much easier to realize since the advent of the Registered Education Savings Plan (RESP), a savings plan specifically for continuing education. Canadian Education Savings Grant matches 20 cents on every dollar you contribute, up to a maximum of $500 each year. Any investment income earned inside an RESP is not taxable to the owner. Rather, when the money is withdrawn for school, the earnings are taxed in the hands of the student. Given that most students have low incomes and receive substantial tax credits for their education, often little to no taxes are ever paid on an RESP. What if your child doesn’t attend college? Do not fear. If the RESP is liquidated, you run the risk of losing the government’s portion only. Alternatively, the RESP can be transferred to a relative for their use or even moved into your personal RRSP.

Thomas Johnson, Cascade Financial Group