The CESG Program

What is the Canada Education Savings Grant (CESG*) Program?

• In 1998, the Canada Education Savings Grant Program was introduced by Human Resources and Skills Development Canada (HRSDC) to encourage contributors to save for a child’s post- secondary education within a RESP by providing “free money”.
• The government tops up your annual RESP contribution by 20%, up to $400 per eligible child, to a lifetime maximum of $7,200.
• Eligibility for the CESG is limited to Canadian residents, 17 years of age or younger, and who have a valid Social Insurance Number (SIN).
• As of January 1, 1998 all qualifying children under the age of 18 began to accumulate CESG contribution room of $2,000 per calendar year, regardless of whether they currently have a RESP.
• Unused CESG contribution room may be carried forward for use in subsequent years.
• 60% of parents are taking advantage of the CESG Program.
• As of 2004, the CESG Program has paid-out $2 billion in grants to RESPs.
• 2 million children have benefited from the CESG Program.
• 15% of parents are unaware of the annual December 31 “deadline” for making RESP
• contributions in order to take full advantage of the CESG Program.

2004 Federal Budget – Enhanced CESG Program

What is the Enhanced CanadaEducation Savings Grant (E- CESG*) Program?

• Effective as of January 1, 2005:
• For families with household incomes less than $35K – 40% E- CESG on the first $500 of annual RESP contributions.
• For families with household incomes between $35K and $70K – 30% E- CESG on the first $500 of
• annual RES contributions.
• In both cases, for contributions of more than $500 (and up to $2,000), the basic CESG of 20% remains the same.
• It is estimated that 1.3MM of the 2MM current CESG beneficiaries will be qualify for the E- CESG.

2004 Federal Budget – New Education Savings Incentives

What is the Canada Learning Bond (CLB*)?

• The Canada Learning Bond was introduced by the Federal Government to help lower- income families open a RESP by offering families education saving incentives.
• Effective as of January 1, 2004, a $500 CLB will be available to children born in families entitled to the National Child Benefit (NCB) Supplement.
• Annual CLB installments of $100 will be available in each subsequent year these children remain eligible to receive the NCB Supplement, until age 15. (Note: $25 will also be deposited to the RESP to help offset any administration costs associated with opening the RESP).
• The CLB will likely benefit approximately 120,000 children for the year 2004.

2004 Alberta Budget – The ACES Plan Grant

Parents in Alberta have a new incentive to help save for post- secondary education – $800 in education savings!

• Beginning with children born in 2005 or later and whose parent( s)/ guardian( s) are residents of Alberta:
• A one- time contribution of $500 to a child’s RESP.
• Subsequent grants of $100 will be available to Alberta students at age 8, 11 and 14.
• The Alberta Government will be investing $20MM annually – growing to $30MM annually by 2019.
• 40,000 children will be eligible for the ACES Plan grant each year.

* Certain conditions apply.

Source: Human Resources and Skills Development Canada (HRSDC) (2005). Federal Budget (2004). Government of Alberta (2005) Alberta Budget (2004).