37 Questions
What is the maximum lifetime contribution limit per beneficiary for an RESP?
$50,000
For RESP contributions, are they deductible from a subscriber's income for tax purposes?
No, contributions are not tax deductible.
How does the Canada Education Savings Grant (CESG) match contributions?
20% match on the first $2,500 contributed annually
Can RESP contributors deduct their contributions from their income for tax purposes?
No, there is no deduction allowed.
When does the CESG become unavailable for a child?
Until the end of the calendar year in which the child turns 17
What must happen if Pavan received any CLB payments in her RESP?
She would have to return the CLB payments to the federal government.
In which RESP type can benefits be easily shared among children if one or more do not attend post-secondary school?
Individual or family self-directed RESPs
What is a key advantage of the individual plan RESP over the family plan RESP?
More control over contributions and investment options
Under which RESP type can you open an account for children you are not related to?
Individual plan RESPs
Which RESP type pools individual contributions with other participants?
Group or scholarship plans
What is the A-CESG percentage for adjusted family net incomes between $43,561 and $87,123 in 2013?
10%
For a child born in 2000, how much in total, including the extra opening bonus, could they receive from the CLB program until they turn 15?
$2,200
At what adjusted family net income level do A-CESG payments become 0% in 2013?
$87,124
If a family's annual contribution to their child's RESP account is $800, how much A-CESG payment will it generate if their adjusted family net income is $40,000?
$80
When can a beneficiary start receiving CLB payments?
If the beneficiary is born after December 31, 2003.
What is the lifetime limit for contributions to a Registered Disability Savings Plan (RDSP)?
$200,000
Who is not entitled to a refund of their contributions made to an RDSP?
Contributors
At what age must contributions stop being made to an RDSP for the beneficiary?
59
When can contributors make contributions to an RDSP without the plan holder's written permission?
With the written permission of the plan holder
Who is eligible to receive a Canada Disability Savings Grant and/or a Canada Disability Savings Bond based on their family income?
Beneficiary
What are the taxable payments that may consist of the CESG, A-CESG, CLB, and any investment earnings on all contributions called?
Education Assistance Payments (EAPs)
If a beneficiary is accepted into a qualified post-secondary educational institution, what type of payments can be withdrawn from their RESP?
Educational Assistance Payments (EAPs)
What type of withdrawals from an RESP are not taxable and can be paid to the beneficiary or returned to the subscriber?
Contributions made by the subscriber
Which federal programs can contribute towards a beneficiary's education savings under an RESP?
CESG, A-CESG, and CLB
Under what circumstances may additional A-CESG and CLB funds be generated towards the education savings of a beneficiary?
Based on the subscriber's adjusted family net income
What is the term for payments from an RDSP that must begin by the end of the year in which the beneficiary turns age 60?
Disability Assistance Payments (DAPs)
What is the unique feature of a Tax-Free Savings Account (TFSA) compared to other registered accounts?
Tax-free investment income withdrawal
Which of the following is NOT a permissible investment in a Tax-Free Savings Account (TFSA)?
Real Estate
What was the annual dollar limit for Tax-Free Savings Accounts (TFSAs) established at when they were introduced in 2009?
$5,000
At what age must an individual have reached to be eligible to open a Tax-Free Savings Account (TFSA)?
18 or 19
In the context of RESP withdrawals, what happens if the beneficiary does not immediately attend a qualified post-secondary education program?
The money in the plan will be forfeited entirely.
What happens to the CLB if transferring the RESP plan is not an option?
It has to be returned to the federal government.
When can an Accumulated Income Payment (AIP) from an RESP become taxable income?
Immediately upon receiving the AIP.
What can a subscriber do if they want to withdraw the tax-free contributions made to an RESP?
They can withdraw it at any time regardless of the beneficiary's education.
What are the consequences for a subscriber if they receive Educational Assistance Payments (EAPs) from an RESP?
The EAPs are taxable income for the subscriber.
What happens to any Investment earnings from an RESP?
They are paid to the subscriber as an Accumulated Income Payment (AIP).
What can be done with RESP benefits if a beneficiary decides not to attend a qualified post-secondary education program?
The benefits can be transferred to another family member's RESP.
Study Notes
Registered Disability Savings Plan (RDSP)
- RDSP is a savings plan for individuals eligible for the Disability Tax Credit.
- Contributions are not tax deductible, and anyone can contribute with the written permission of the plan holder.
- No annual maximum contribution limit, but a lifetime limit of $200,000.
- Contributions can be made until the end of the year the beneficiary turns 59.
Disability Assistance Payments (DAPs)
- Payments from an RDSP are referred to as Disability Assistance Payments (DAPs).
- Beneficiary must report any interest income, grants, and bonds paid out as part of a DAP for tax purposes.
Tax-Free Savings Account (TFSA)
- TFSA provides a way to earn investment income tax-free.
- Investment income earned within the plan is tax-free when withdrawn.
- To open a TFSA account, you must have reached the age of majority (18 or 19, depending on the province or territory).
- Permitted investments include cash, mutual funds, securities listed on a designated stock exchange, GICs, bonds, and certain shares of small business corporations.
TFSA Contribution Limit
- Annual TFSA dollar limit was established at $5,000 in 2009 and is periodically increased by $500 based on inflation.
- Example: In 2013, the annual dollar limit was increased to $5,500.
RESP (Registered Education Savings Plan)
- Types of RESPs: Individual or family self-directed RESPs and Group or scholarship plans.
- Contributions are not tax deductible, but growth on investments is tax-sheltered.
- No annual limit to the amount that can be contributed, but a lifetime maximum of $50,000 per beneficiary.
Canada Education Savings Grant (CESG)
- The Government of Canada assists families with the cost of post-secondary education through the CESG.
- CESG is available until the end of the calendar year in which the child turns 17.
- Federal government matches 20% on the first $2,500 annual contribution (up to $500 CESG).
Additional CESG (A-CESG)
- A-CESG is determined based on adjusted family net income.
- Example: For an adjusted family net income of $43,561 or less, the A-CESG is 20%.
Canada Learning Bond (CLB)
- CLB is additional money offered by the federal government for families that receive the National Child Benefit Supplement (NCBS).
- The maximum amount that a beneficiary may receive in their RESP account from CLB payments is $2,000.
RESP Withdrawals
- Once a beneficiary is accepted into a qualified post-secondary educational institution, they become eligible to make withdrawals from their RESP.
- These withdrawals are called Educational Assistance Payments (EAPs).
- EAPs consist of the CESG, A-CESG, CLB, and any investment earnings on all contributions.
Test your knowledge about contributions to Registered Education Savings Plans (RESP), including the maximum lifetime limit, tax deductibility, and annual contribution limits.
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