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The top 5 questions about RESPs


As we head into the back-to-school season, I’ll tackle the top five questions we hear from clients at Embark.

1. What can an RESP be used for?

An RESP can be used for just about any education-related cost—not just for tuition. Although, tuition is one of the biggest expenses, and it’s one of the key reasons parents and grandparents open an RESP. For the 2022–2023 academic year, the average tuition fee for a full-time undergraduate student in Canada weighed in at $6,834—2.6% higher than the year before.

Tuition costs have been incrementally increasing every year, and some professional programs cost significantly more than others. If you have a future doctor or dentist in the family, for example, know that one year’s tuition averaged $15,182 and $23,963, respectively.

And if your child decides to attend a post-secondary educational institution that isn’t a college or university, like a trade school, you can likely still use RESP funds to cover expenses, as long as it’s an eligible school in the eyes of the Canadian government. And if your child wants to study outside of Canada, you can use an RESP for that, too, as long as they enroll in a course at least 13 weeks long, or three weeks for university programs.

In addition to tuition fees, RESP funds can also pay for rent or residence fees, dormitory meal plans, textbooks, school supplies, tools, transportation, student athletic or activity fees, tech devices and more, as long as withdrawal requirements are met (more about that in question #4, below).

2. Who can contribute to an RESP?

Anyone can become an RESP “subscriber” (contributor) and put money into a child’s RESP, up to the plan’s lifetime limits. Typically, parents open an RESP for their child, or a family RESP for multiple kids.

If you’re a grandparent, aunt, uncle, family friend or someone else who wants to pitch in, it’s a good idea to coordinate with the parent(s) to avoid over-contributing. The RESP lifetime contribution limit per child is $50,000. If an RESP’s subscribers collectively contribute more than that, the Canada Revenue Agency (CRA) will impose a tax of 1% of the excess amount per month on the total amount until that money is withdrawn. You don’t want that effect from your gift, do you?

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