The Government of Canada helps parents to save for their children's post-secondary education through Registered Education Savings Plans (RESPs), the Canada Education Savings Grant (CESG) Program and savings incentives like the Canada Learning Bond (CLB). Each year, the Government provides about $600 million in tax and grant assistance to encourage saving in these plans.
On March 19, 2007, the Government of Canada announced changes to the Federal Budget that prove their continuing support for RESPs. The changes will provide additional flexibility and encourage Canadian families to save for post-secondary education with RESPs by:
Eliminating the $4,000 limit on annual RESP contributions.
Increasing the lifetime limit on RESP contributions to $50,000 from $42,000.
Increasing the maximum annual amount of Basic CESG that can be paid in any year to $500 from $400 (and to $1,000 from $800 if there is unused grant room from low contributions made in previous years). Each child will continue to be eligible to receive up to $7,200 in CESG.
Proposing to introduce a new non-refundable child tax credit for parents based on an amount of $2,000 (indexed) for each child under the age of 18 years at the end of a taxation year. This new tax credit will take effect beginning in 2007, and will provide personal income tax relief of up to $310 per child. This move will free up funds within families, some of which funds may be set aside in an RESP for their children's post-secondary education.
While these changes will apply to contributions made in the 2007 tax year, the portion of any CESG entitlement that is attributable exclusively to the increased CESG limit will be paid to RESPs only after Royal Assent to the enabling legislation is received and once delivery systems are put in place, as outlined in the 2007 Federal Budget.
We will keep you posted on further process from Human Resources and Social Development Canada (HRSDC) specifically as it pertains to when we can begin accepting RESP contributions over the $4,000 or $42,000 limits.
For more information click here: http://www.budget.gc.ca/2007/bp/bpc5de.html#savings
Source: Federal Budget 2007 (March 19, 2007)