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  • What is an RESP ?


    By Simba_raj




    What is a Registered Education Savings Plan (RESP)?

    A Registered Education Savings Plan (RESP) is an education savings plan that has been registered under the Income Tax Act and offers significant advantages to families saving for their child's future education expenses.

    An RESP allows the growth income earned on contributions to remain tax deferred until your child enters a post-secondary program (within 25 years) and the money is withdrawn. A nominated child can be eligible for government grants up to $9,200.

    Only when the student begins to use the Plan for education does the investment income become taxable and it is taxed in the hands of the student, who typically has little other income. Accordingly, he or she pays little or even no tax on RESP income. Virtually all full-time or part-time post-secondary education is eligible for assistance through RESPs, as long as the buyer meets the basic government requirements.

    The Global Educational Trust Plan is an education savings plan that has been registered as a result of the buyer ("Subscriber") and student ("Nominee") meeting government guidelines.

    Annual Education Costs and Expenses: .
    * Tuition1: .....................................................................$4,172
    * Compulsory Fees1: .. ................................................ $608
    (student health services, athletics and recreation,
    student association and other fees that apply
    to full-time Canadian students)
    * Books and other reading materials3:............................$871
    * Supplies3: .....................................................................$120
    * Accommodations (1-bedroom)2: ..............................$4,000
    (close to the campus in an apartment for
    approximately 8 months)
    (approx.)
    * Groceries/Meals3: .................................................... $2,484
    * Public Transportation3: ................................................ $768
    (Drives to school: include car payments,
    insurance, maintenance, parking)
    * Miscellaneous3: ...........................................................$2,496
    (personal and health care, clothing,
    household items, etc.)

    These expenses are part of the cost of providing your children an education, up to $15,522 or more for one school year. So, if your children were to attend university today for four years of studies, the cost could be over $62,000 per child.


    Would you be ready to cover the real cost of education?
    Visit the federal government "Can Learn" Web-site mentioned here below to calculate your own student's potential costs today.

    Sources:
    1. "University tuition fees", The Daily, Statistics Canada Web site, Sept. 2, 2004
    2. "The Bottom Line", Maclean's Guide to Canadian Universities '05, Feb. 2005: pg. 52, 57-58.
    3. "The Education Cost Calculator", Can Learn Web-site (www.canlearn.ca), Canada Student Loans Program Directorate, Human Resources and Skills Development Canada, Feb. 3, 2004

     


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