Benefits of an RESP
When you open an RESP you can combine tax deferral, flexibility and government assistance for your children post-secondary education. Reasons that makes it great choice among Canadians are
- RESP is considered as tax deferral that means that the investment growth earned and the interest income within the RESP are not taxed for the period the fund is within the plan. Once the fund is withdrawn, the student who utilises it will be taxed. Normally a student will be paying very little or sometimes no taxes at all.
- Another benefit derived from RESP is Canada Education Savings Grant or CESG. With this, the government will match 20% on the first $2500 that is contributed by you annually towards RESP. a beneficiary will be eligible for the period till they turn. Government will give a maximum of $7200 per beneficiary till they turn
- It gives the parents an opportunity to save for their child post-secondary education where they too can save something on taxes.
Hence, when you are planning for future of your children and their higher education it is the best way to plan it. With it, you get the opportunity to help other students among your friend or family about whom you think that they have the prospect.
Take these plans from an expert agency who will explain to you about all these intricacies in details.