The CESG or the Canada Education Savings Grant is a financial incentive offered to Canadian citizens to augment the value of RESPs from Heritage Education Funds plans. Here are five things you need to know CESGs and how it is offered to subscribers, or people who open the accounts for beneficiaries.
1: Anyone can open an RESP for a beneficiary
Applying for and RESP and subsequently, CESG assistance is not dependent on the biological connection of the subscriber and the beneficiary. You can registered a savings plan for another person, even if that person is not your child. You can even register a RESP for an adult if you want to.
However, the CESG is primarily for kids who are growing up in Canada and will be university in less than two decades.
2: You need to apply for CESG
CESG is not automatically given to anyone who has an heritage RESP. The primary caregiver or subscriber of the beneficiary must apply for the financial grant from the Canadian government. There are several steps involved in the process.
1. Register the birth of the child.
2. Acquire the birth certificate of the child.
3. Apply for the child’s social insurance number or SIN number.
4. Contact a financial institution or scholarship fund dealer and open an RESP.
5. Go to the website of CESG and download the documents needed for application.
The primary document needed for the application process is the SDE 0093 E. If you happen to be the grandparent, uncle, or anyone else who is not the primary caregiver of the child, you need to fill up a second document (SDE 0093 E – Annex B).
3: CESG provisions are clear on payment withdrawals
By law, you will be able to withdraw your money any time from any RESP you get from any institution. However, if you want to benefit from government payments to your child’s account, you need to make sure that you fulfill the following criteria:
i. You must make at least $2,000 in contributions to your child’s RESP before he or she turns sixteen years old.
ii. You must not withdraw any amount from the RESP four years before your child is sixteen years old.
4: The Canada Learning Bond is different from the CESG
The Canada Learning Bond or CLB was designed to help modest-income families in Canada who want to start saving for second-level education of their children. EAPs can be given as early as secondary school, and you can apply for Canada Learning Bond as well.
To qualify for the Canada Learning Bond, the beneficiary must have been born before January 1, 2018. On the first year of eligibility, a $500 contribution will be made under the CLB grant.
5: There are maximum values for the CESG
The lifetime, cumulative maximum for each RESP beneficiary is $7,200. The actual amount paid out by the government will be different depending on the income of the family. Families with higher incomes will get slightly lower CESG contributions annually.