This is to show that growth is tax free...
WHAT IS A REGISTERED EDUCATION SAVINGS PLAN (RESP)?
A Registered Education Savings Plan is a special savings plan that can help you, your family or your friends save for education after high school. RESPs are registered with the Government of Canada so that savings for education can grow tax-free until the person named in the RESP enrolls in studies after high school.
I wish people instead of being critical would look at the link and then comment...
Quote:
Originally posted by regar
This is to show that growth is tax free...
WHAT IS A REGISTERED EDUCATION SAVINGS PLAN (RESP)?
A Registered Education Savings Plan is a special savings plan that can help you, your family or your friends save for education after high school. RESPs are registered with the Government of Canada so that savings for education can grow tax-free until the person named in the RESP enrolls in studies after high school.
I wish people instead of being critical would look at the link and then comment...
I don't know the source of your statement..above, but the fine print is that the savings will grow tax-free UNTIL IT IS WITHDRAWN, at which point in time the amount withdrawn from the plan is taxed. I recently withdrew for my child's education and was told by my banker to expect a T4A at the end of the year (in the name of the child). Which means that my child will have to show it as income of the year. Now the point is since in year 1 of University, the child has low to nil income, they tend to fall in the lowest tax bracket and hence actually do not pay any tax.
Another thing to keep in mind is that you've already paid tax on the amount that you invest in RESP.
As regards your statement in your earlier post - It is a vehicle to invest money to save tax - I would be interested in knowing how is RESP a vehicle to invest to save tax.
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SS
Reiki Grand Master
Location: carl sagan's universe
Posted on: 12-12-06 21:01:33
Too much hair-splitting.
Keep up with the good work regar. Links are useful.
Location: carl sagan's universe
Posted on: 13-12-06 09:48:58
Here is some info I found useful.Taken from a newsletter from a website.
Parents Not Getting Education Grants from Government
It’s a tragedy. There is money available but fewer than 50% of families in Canada take advantage of it. The federal government is offering up to $9,200 in grants for each resident child in Canada for their post-secondary education. And that’s just the federal government. If you live in Alberta, you can get even more added through a provincial grant program. Given the cost to send a student to college or university today, you’d think people would be jumping to get their hands on some of this money and start to save.
What’s the catch, you say? Actually none, since most families in Canada can easily qualify for at least one of the programs offering a maximum of $7,200. If your family qualifies for the National Child Benefit Supplement, then you can likely qualify for another government grant program too, offering up to $2,000.
Four years of university in an Arts program costs around $62,000 (or $15,522 per year) in today’s dollars, according to the federal government “CanLearn” web site, using the Education Cost Calculator. By the time your small child reaches 18 years of age that cost will have increased considerably.
All parents want to give their children the opportunity for an educated life. So, plan to start putting away a little money now. A good way to do this is by opening an Education Savings Plan with one of several companies that specialize in these plans and are eligible for the government grants. By doing so, you’ll be able to see how easy it is to qualify for the added government money and at the same time make application for it.
Location: carl sagan's universe
Posted on: 14-12-06 10:10:40
Here's another newsletter on the costs of education:
- “ Education costs a lot but the real cost is not having it”
- If you have young children not yet of College or University age, you should be thinking about how your family will be able to afford the costs.
To start planning we must first be familiar with what the present costs are now and then project the approximate future costs for our children’s entry years.
We have drawn upon the information from website canlearn.ca which has led us to the following information.
The approximate costs for one year at University comprising 2 semesters add up like this for a student living away from home:
Tuition fees - $4,800
Compulsory fees $ 800
Books and Supplies $1,000
Transportation $ 800
Other living expenses $2,100
Residence and Meals $6,500
Total $16,000
For College,tuition fees are lower by about $ 2,000 per year which makes costs at approx $14,000 per year.
Living at home will decrease total costs by the costs of residence and meals to approx. $ 6,500. This makes University about $ 10,000 per year and college at about $ 8,000 per year.
Multiply this by the possibility of attending for 4 years and we have costs over $64,000 away at University to $ 40,000 at home.
Future costs with a factor for all costs rising at 3% per year indicate that a four year university education could be in the vicinity of $100,000 for a student living away from home and close to $60,000 for living at home in about 15 years from now.
If you have more than one child and they are both close in age your family’s cost can double for the years they attend at the same time.
What can we do?
Encouragement for higher education should never stop but it should also be backed up by setting aside money for future education.
How do families cope now for their children’s education costs ?
According to the “ Daily Wednesday, April 26, 2006” a statistics Canada publication titled “ Study: how students fund their postsecondary education”
Data available from 2001/2002 states that personal savings is most common then money from family, partner & friends.
For the most expensive programs this did not cover tuition, fees, books and supplies for the majority of students.
Student Loans were an important source of financial support and were used by 26% of students. However only 15% of all students covered their education costs with student loans.
Grants and Scholarships were received by 29% of students but this only covered education costs in full for only 5% of the student population. Over 90% of students used more than one source for education expenses.
The information from the article leads us to draw conclusions that it would be wise to set aside money early for the intended purpose. We see that the reason that student loans did not cover all costs because qualification for how much and if there is eligibility at all depends on family income.
The best choice among different funding methods is now made available through Registered Education Savings Plans (RESP’s). We will go into this method of savings and advantages that include tax sheltering, government matching grants of the CESG, additional CESG and the CLB in the next article
Location: carl sagan's universe
Posted on: 15-12-06 10:20:03
The previous article provided information on how much education costs can be. In review the present costs for a student going to university for one year and living away from home averages approx. $16,000 while a student living at home could expect to pay approx. $10,000 per year. College tuition fees were approx. less by $ 2,000 per year. The cost included tuition fees, compulsory fees, books & supplies, transportation and other living expenses. Away from home costs included residence and meals.
Future cost estimations for education starting 15 years from now indicate around $100,000 for 4 years at university away from home and close to $60,000 living at home.
The Registered Education Savings Plan (RESP) is a government program created for parents and other interested sponsors to nominate children (beneficiaries) for receiving funds for Post-secondary education. Most financial institutions such as banks, trust companies, mutual fund and securities dealers as well as specialized Scholarship plan dealers make RESPs available.
There are definite advantages in having RESPs.
The first is that the growth on the contributions you make are not taxed and are held in trust for the student. The second advantage is that depending on eligibility the contributions can attract up to $9,200 in Government Grants for each child. Contributions remain free of tax and they can be retained by the parents or used for education while the students receiving taxable income from an RESP have typically low income and tax deductions so they pay little or no tax.
When a plan is started early it has time for compound growth from your contributions and the government grants. This can mean complete costs or partial costs for education can be covered.
The Government grants are available to children from their birth year up to and including the year in which they turn 17.
The Basic Canada Education Savings Grant (CESG) is an addition paid by the government when a person makes contributions to an RESP. It is based on 20% of amounts up to $2,000 contributed per year per child and is available to all Canadian resident children. It has carry forward provisions for years that were missed by not having an RESP and maximizing can be added in future years.
Recently the Additional CESG has been added to provide even more funds for lower income families. It is paid on amounts up to $500 in contributions per year per child. There is an income qualification for the 10% or 20% addition.
The Canada Learning Bond (CLB) has also been included as a grant for children born on or after Jan 1st 2004 and also has family net income qualification. If qualified $500 is available in the first year and $100 for each qualifying year to age 15.
With a necessity to save for our children’s education and the added grants almost every financial planner and advisor recommends savings for families for families with children through RESPs.
Statistical evidence indicates that approximately 65% of children under 18 do not have RESPs.
