Find the RESP money you've been missing
By ATB Financial 25 October 2018 1 min read
It’s probably the thing new parents hear the most from well-meaning people in their lives–enjoy it, it goes so quickly, (or some variation). It does go quickly. There’s no denying that. So talking about saving for your child’s education after high school graduation is never premature.
What is an RESP?
Most people are familiar with a Registered Educational Savings Plan (RESP). It’s a tax-deferred savings plan that makes it easier to save money for a child’s post-secondary education. Opening an RESP also opens the door to additional money from the government. The federal government supplements RESP contributions, matching up to 20 per cent of your annual contribution (to a maximum of $500 per beneficiary per calendar year).
Finding the money for your contribution.
Enter the Universal Child Care Benefit (UCCB). Canadian parents are now receiving $160 per month for each child under the age of six, and up to $60 per month for each child aged six to 17. See where we’re going with this?
Prior to the increase, which took effect January 1, 2015, those with children under six were getting $100 per month, and nothing for older children. On paper, parents now have an additional $60 a month per child, compared to 2014.
So, there it is—the money you’ve been missing to get that RESP started. Even a portion of it could make a difference a decade or more down the road—when your diaper and daycare bills have morphed into tuition and textbook costs.
There is one more thing you should be aware of though. The UCCB is taxable. Come tax time, you will have to claim it on your tax return. That means your tax refund could be a bit smaller than it’s been in previous years – or if you typically pay tax you could owe more.