The RESP has existed for over 25
years but it is misunderstood. It is a tax differed
shelter at the time of withdrawal, such as RRSPs.
The difference is that contributions to the plan are
not tax deductible.
Benefits for the taxpayer
1) The interest earned in funds
placed in an RESP is not taxable each year, but only
at withdrawal, for he who made the withdrawal, such
as your child. This usually means a very low or no
income because it usually is while studying.
2) Since 1 July 1998, the federal
government helps by paying directly to your plan 20%
of your contribution up to a maximum of $500.
Who can help
Parents, grandparents, uncles and
aunts, other family members and anyone wishing to
participate in the education of a child may
contribute to the plan.
An adopted child is covered by
the program.