Students may have to pay income tax on payments from the RESP. If total contributions exceed the lifetime limit of $50,000, each subscriber must pay a 1% tax on their share of the excess contribution each month until the extra money is withdrawn. If the RESP is not used or is transferr...
RESPs are tax-deferred, so as your investments grow in the account you don’t pay any immediate tax. As the money is withdrawn, the beneficiary will be taxed on the growth of the investments and any grants or bonds, often at a low tax rate because they’ll be students. ...
More details on RESPs and government grantsRESPs Government grants RESP basics: An RESP is a tax-sheltered plan designed to help you save for your child’s post-secondary education Contributions aren’t tax-deductible but your investment grows tax-free until funds are withdrawn to pay for ...
grants and investment earnings. These funds can only be paid to the beneficiary and will be taxed as income. But because students typically fall into the lowest tax bracket and can claim tuition and education tax credits, they’ll usually end up paying little to no income tax on these ...
Anyearnings are tax-free while in the RESP, so interest gained doesn't count as income on the subscriber's taxes. The money isonly taxed when it's withdrawn— usually to pay for the beneficiary's education. Because students usually have a low income,beneficiaries can often withdraw their m...
Your earnings are all tax-sheltered – and when withdrawn the earnings are taxed to the child – who may pay little to no taxes on them as students. Not just for tuition The money can be used towards more than just tuition costs – including books, living expenses, other course materials...
's education investment on a tax-deferred basis, without incurring taxes on capital gains, interest and dividend payments as long as your money remains in the plan. Plus, your RESP may eligible for several federal and provincial grants, with additional grants for low to middle-income families....
Government grants The Government of Canada will match20%of up to$2,500in contributions to all RESPs, up to$500annually, with a lifetime limit of$7,200per child. Tax savings There's no tax on investment income or growth until funds are withdrawn fromthe RESP. ...
If the student is expecting to pay income tax that year, it may be beneficial to set money aside to pay the tax bill the following year. What is the maximum RESP withdrawal amount? There is no limit on the amount of PSE contributions that can be withdrawn. ...
“If the subscriber or account owner is a non-resident, they might have to pay taxes on any income earned in the RESP account as well as capital gains, according to the rules of their resident country.” This implies that only your resident country will tax the income and that Canada wil...