The Canada Education Savings Grant (CESG) is deposited to the RESP directly by the Government of Canada. The amount that will be deposited is as follows:
- While you may contribute any amount to the RESP in any given year (subject to the lifetime maximum of $50,000), the government will contribute 20% or $500 on the first $2,500 contributed to the RESP in any year.
- Note, however that if the subscriber’s total net family income is less than $37,885 annually, the first $500 deposited will receive a grant of 40% or $200. The balance of your deposit up to $2,000 will receive a grant of 20% or $400. Thus, the total grant will be $600.
- If the subscriber’s income is greater than $37,885 but less than $75,769, the first $500 deposited will receive a grant of 30% or $150. The balance of the deposit up to $2,000 will receive a grant of 20% or $400 for a total of $550.
- If the subscriber’s income is greater than $70,000, then the basic 20% on the first $2,500 will apply or, $500.
The maximum CESG for a year is $1,000 if there is unused grant room. The maximum lifetime CESG limit is $7,200 which means that if you qualify for grants of only 20% of contributions, you will reach the maximum CESG once you have contributed $36,000 of eligible contributions. Note that in this case, “lifetime” means from birth up to the end of the year in which the child turns 17 years of age.
If the child does not continue his/her education past high school, or does not use the whole CESG credited to the RESP account
The unused CESG must be returned to the government.