The Basics of RESP [Registered Education Saving Plan]

Do you want to give your children the best education possible? Can you afford to pay for their education from your salary? Most of us cannot, but there are special savings plans created to help you in such situations. Before we continue, you should know that this savings plan is for the people who have a residence in Canada. 

RESP or the Registered Education Saving Plan is an investment platform that parents from Canada can use to save money for their children’s post-secondary school education. What makes this savings plan so unique? The thing is parents can use such savings plans to get funds from government grants directed at helping with tuition fees for education.

RESP

One of the major benefits of the RESP is the fact that it has significant tax cuts associated with it. Since most of the users of such a savings plan are students, they do not have to pay any government issued taxes on the income they receive. That means that they can use the fund freely without paying additional costs associated with such transactions.

The savings plan is designed so the student can have a regular source of income while they are studying and they can also use it freely. That way they can enjoy the benefits of modern education without bothering their parents every month for more funds. The plan is also good for the parents because it gives them special terms that they can use for their savings, and it can give them enough time to save up for their education and future without having to worry about their salary.

How to Start Saving

Now, this couldn’t be simpler. Once your child is born, you can go to any financial institution and open a savings account for their education. The savings accounts are open, and relatives and neighbors can put money into the account as they want to. Once the child reaches a certain age, the Canadian government draws a line on the account and calculates the percentage they will add to the savings account. The government calculates the exact amount based on a predetermined set of rules, and then they give every child a boost to their funds.

After the savings period is over the child will have the funds transferred to their RESP account, and they can start using them without having to pay extra money for taxes. That way the government stimulates the parents to save for their children while at the same time it helps its citizens get a higher education that they can afford.

The money you get through this grant cannot be used for all types of expenses. The grant associated with RESP has to be used for educational purposes, and it has to be spent in institutions that are part of the Canadian educational system. The government can ask for the funds to be returned if the person who gets them does not spend the money on their education within a predetermined period of time. Also, if you spend the money on stuff that is not linked with your education, you will pay extra tax. Beside that everything else about the savings plans helps the parent safeguard their child’s future. Gurinder Chahal – Manager – Punjab Insurance will guide you to set up RESP Plan and help you to get all the Govt Grants and additional 15% Diploma bonus from the company, call 587-707-7000