Saving for your child's education
Like every parent, you want the very best for your children - including a good education. In today's competitive job market, having a college or university degree is more important than ever before. According to Statistics Canada, the cost of post-secondary education continues to increase faster than CPI; with tuition fee increases greatest in the professional fields. This is why it is essential to start planning now for how you will meet the costs of education down the road.
Registered Education Savings Plans (RESPs)
Contributing to an RESP is one of the best ways to save for a child's post-secondary education. Contributions are tax-sheltered and income earned on contributions is not taxable until paid out to the plan beneficiary. Withdrawals of income can be made to a beneficiary who is in full-time attendance at a qualified post-secondary institution.
Subscribers may contribute a lifetime maximum of $50,000 per beneficiary. A basic Canada Education Savings Grant of up to $500 (20% of eligible contributions) is payable on the first $2,500 contributed annually per beneficiary ($1,000 if there unused grant room carried forward from a previous year.) To earn the grant, contributions must be made before the end of the calendar year in which the beneficiary turns 17 years of age. The lifetime CESG limit is $7200. Note that beginning in 2008 additional grants are payable under certain circumstances.
Getting started...
ScotiaMcLeod's RESP is an ideal solution; offering the widest range of eligible investments as well as a choice between individual and family plans. Starting early promotes the power of time; allowing you to take full advantage of tax-free compounding over many years.