Say you put $2,500 a year into an RESP for a newborn. The government adds a basic grant of 20%, up to $500 a year, and over 18 years those grants reach the $7,200 lifetime limit. At 5% growth the plan holds about $86,600 at age 18, built from $45,000 of your own money.
What an RESP is
A Registered Education Savings Plan is a way to save for a child’s schooling after high school. Investments grow tax-deferred. When the money comes out, it’s taxed in the student’s hands, usually at a low rate. Any amount can go in.
How the basic CESG works
The Canada Education Savings Grant pays 20% of what you contribute each year, to a maximum of $500 for each child. Across a lifetime, one child can collect $7,200. You can earn grants until the end of the year the child turns 17.
Carry-forward room
Miss the full $500 in a given year and the unused room isn’t lost. It builds up. Later on you can earn up to $1,000 of grant in one year, which takes a $5,000 contribution. A child who starts late gets that catch-up room in the calculator.
Reaching the maximum
A $2,500 contribution earns the full $500 every year, and reaching $7,200 takes 14 years and a bit. Late starters need bigger deposits to catch up. Type in your child’s age and your yearly amount to test it.
Growth and risk
The return field controls how fast the investments grow. A 5% return is a middle case for a balanced portfolio. Markets can fall, though. Younger children can take more risk, and it makes sense to shift toward safer options as studies get close.
What the estimate leaves out
Lower-income families can earn an extra grant on the first $500 contributed, and the Canada Learning Bond may add more. Neither is counted here, so your real total may come out higher. Your provider can tell you what applies.
Taking the money out
Payouts come as educational assistance for full-time or part-time study, and the student pays the tax on grants and growth. If the child never studies, the grants go back to the government. The growth can sometimes move to an RRSP under certain rules.
A late start, worked through
A parent begins when the child is 8 and adds $1,000 a year, earning $200 of grant annually. After 10 years the grants total $2,000, and at 5% growth the plan holds about $15,800. Beginning sooner lets room build up and gives growth more time.
Opening a plan
Banks, credit unions, investment firms and group plan providers all offer RESPs. Fees vary, so ask. You’ll need the child’s social insurance number to claim the grant. Individual and family plans allow more choice than group plans do.
Deciding how much to save
You don’t have to hit $2,500 to benefit. Every dollar up to that level earns 20 cents. Saving $100 a month, or $1,200 a year, still brings $240 of grant each year. Start with what fits the budget, then raise it when possible.
Where to go next
Compare tax-free savings in the TFSA calculator. Model other growth rates with the compound interest calculator. For child benefits, try the Canada Child Benefit calculator.
Frequently asked questions
How much is the CESG?
20% of contributions, up to $500 a year for each child.
What is the lifetime CESG limit?
$7,200 per child.
Until what age can I earn the grant?
Until the end of the year the child turns 17.
Can I catch up on missed years?
Yes, up to $1,000 of grant in one year.
Who pays tax on RESP growth?
The student, when it is paid out.
What if the child does not study?
The grants must be returned, and growth may move to an RRSP under certain rules.
Sources and updates
Last reviewed: . Full disclaimer. How we build calculators. Editorial policy.
Estimate only. This calculator gives general information for planning. It is not tax, legal or financial advice, and it is not affiliated with the City of Toronto, MPAC or the Canada Revenue Agency. Results depend on the numbers you enter and may differ from official amounts. Check official sources or a qualified professional before you decide.