Tax Advantages of Registered Education Savings Plans
This time every year the big questions pops up – what are you buying with your tax return? Not saying I haven't splurged before but once we had kids and knew we needed to take a little responsibility for their future and ours tax returns took on a new meaning to us. With the cost of living on the rise and post secondary tuition rising NOW is the time to start saving! Not to mention the accumulation of interest, government grants and tax benefits.
Start Early. Save Often. Stay Invested.TM
~ Heritage Education Funds
You might remember how I was recently talking about making everyday affordable and how recent research studies have stated that the average cost of raising a child to the age of 18 is an estimated $250,000. Well I have put together some tips for you to start saving for your child's future and maybe make your wallet love you again!
Take Advantage of Tax Return and Invest in Your Child's Future!
RESP – Registered Education Savings Plan
RESPs are a Canadian product only and registered with the federal government, which is established for the purpose of providing financial assistance to a beneficiary (usually a child) when he or she pursues a post-secondary education. With an RESP you will qualify for education savings grants like the Canada Learning bond (CLB) as well as many other provincial grants.
It isn't a secret RESPs have been around for awhile now and it is easy to make them grow with a few small contributions a year, like your tax refund 😉 hint, hint!
- Government Grants
- The Canadian Government tops up your annual RESP contributions by 20%, up to $500/year and a lifetime maximum of $7,200 per eligible child
- Canada Learning Bond when you open a qualifying RESP, an initial CLB of $500 is available to be deposted into the child's RESP, subsequent installments of $100/year will be available for every child until age 15
- Tax Benefits
- You can defer the taxes on your investment earning while your education fund grows, when your child is ready to use the RESPs they are taxable in their name and being a student their taxes should be lower
- Because you live in B.C., Alberta, Saskatchewan, or Quebec
- B.C. Training and Education Savings Program (BCTESP), this grant is offered to each resident born on or after January 1, 2007 after the beneficiary turns 6 the province will deposit $1,200 into their RESP
- Alberta Centennial Education Savings Plan Grant (ACES), qualifying children boron to or adopted by Alberta residents are entitled to a on-time grant of $500 to a chil's RESP, subsequent grants of $100 may be available to children attending school at ages 8, 11, and 14
- Saskatchewan Advantage Grant for Education Savings (SAGES), available to beneficiaries who are 17 or younger is 10% of annual contributions made into an RESP on or after January 1, 2013 with a max of $250 and $4,500 in a lifetime
- Quebec Education Savings Incentive (QESI), beneficiary must be under 18 and a resident of Quebec as of December 31st of the taxation year for which the grant is claimed, they are eligible for 10% annual RESP contributions to a max of $250
It is super simple to set up a plan, just visit Heritage Education Funds and they'll have you set up and ready to save in no time. A few tips to make savings easy and take advantage of all the government grants available are:
- contributing via a tax return – take your tax return and make it a contribution to your child's education, easy peasy!
- birthday money – instead of toys ask family members to contribute to the child's education fund and help you grow the savings!
- child tax benefit – if you receive the child tax benefit in Canada why not take that and turn it into education savings!
- automatic contributions – set an automatic amount monthly to contribute to the fund and have it taken out so you don't even notice its gone!
I know sometimes it is easier said then done but by simply opening an account with a small deposit you'll be well on your way to growing your child's education savings. For more great tips visit Heritage Education Funds social media pages:
Heritage Education Funds Inc is offering an Annual RESP Draw where you can win $20,000 in contributions towards RESPs! The Annual RESP Draw offers you a chance to win 10 of 8 contributions of $2,500 towards a Heritage Education Funds RESP plan. Draw day is December 31, 2014 – You can enter HERE!
Are you investing in your child's future?
What are ways you like to contribute to your child's RESP?