Comprehensive CESG Overview
The CESG or the Canadian Education Savings Grant is basically, the fund that the federal government adds to the various RESP accounts. Launched officially in 1998, the initiative is a financial aid by the government to help guardians, relatives, friends and parents save for their children's future education. Immediately the beneficiary clears high school they can use the funds to finance their part time or full time post-secondary studies.
CESG consists of 2 main parts: Basic CESG and Additional CESG.
In the basic CESG initiative, the federal government, adds 20 percent of any contribution made to an RESP account up to a maximum of $500 per year and up to a lifetime limit of $7200.So if you are not able to contribute in a given year, you can always catch up in the subsequent years.
This initiative is
designed specifically for children that come from middle and low income families. The funds are directly deposited to the RESP account so as assist them get a good percentage of the maximum grant. In simpler terms, Additional CESG acts like a supplement to the money the child gets via the basic CESG.
If the recipient meets the basic requirements for the grant, they will continue to receive this grant until they turn 17.The basic requirements include: The recipient have Canadian citizenship, they must have an active RESP account registered under their name and they must have an active Social Insurance Number. If a child is 17 or 16 years old, they may qualify for the grant if they meet any of the following requirements:
- Must have contributed at least $2000 to their RESP before they turned 15. No amount should have been withdrawn.
- A contribution of $100 yearly was made to their plan for at least 4 years before they turned 15
For a child to qualify for this initiative he or she must:
- Have Canadian citizenship
- Have a genuine Social Insurance Number
- Have an active RESP in their name
- Have contributed to their plan
- Have requested the additional CESG formally
Now depending on the parent’s income, the child could get an additional 10 or 20 percent on every dollar contributed for the first $500 per year. If the family’s net income annually is less than $45,282 the first $500 that is contributed to the child’s plan could earn another $100.This basically means that the child could get up to $600 annually.
Applying for the grant
To receive the grant, you must have an active RESP account and contributing money to it. Then your provider will apply on your behalf. The RESP provider will help you complete the application form and if approved the grant will be credited into the RESP account in question. Not sure about where to start? There are many credible financial firms like Knowledge First Financial that deal with RESP that can help. Most of them have representatives that specialize specifically in RESPs and can take you through the process swiftly. Good luck and happy investing!