Hi Hakuna,
Having enrolled several children in RESP programs, I can assure you that you cannot put money aside for your child in an RESP from 1998, unless you were resident from that year. It would seem from your info that your child is resident from 2000, thus you will be allowed to put money into an RESP account from year 2000 only upto to max of 4000 each year.
In your example asuming your child will not turn eleven this year, we have

1) year 2004- max contribution is $4000- CESG is given on full amount as grant on $2000 available for current year plus year 2003.

2) year 2005- max contribution is $4000- Grant is given on full amount as grant on $2000 available for current year plus year 2002

3) year 2006-max contribution is $4000- Grant is given on full amount as grant on $2000 available for current year plus year 2001

4) year 2007- max contribution is $4000- Grant is given on full amount as grant on $2000 available for current year plus year 2000.

5)year 2008- max contribution is $4000, however CESG only available on $2000 as you arrived in 2000 and there is no more space available for the grant.

6) year 2009- max contribution is $4000, however CESG only available on $2000 as you arrived in 2000 and there is no more space available for the grant.

and so on; the CESG will continue until the year your child turns 17.

After this you can contribute $4000 every year until a max of $42,000 has been reached within a time span of 21 years, but no CESG will be paid.

In the case given above, you can contribute $4000 for 10 years and then $ 2000 in the 11th year for a total of $42,000. However as pointed out the CESG will be given to you until the child turns 17 as per the schedule outlined above.

In case you are wondering why you would wish to keep on contributing for 4 years after the child turns 17, many people do this as they wish the money to grow tax free and then they gift the excess to the child or roll over into their RRSP.

If this seems too much info and you wish further clarification either post your queries here or email me at or call me at 905-781-9557

However, please also clarify with Teja.

Teja, if you don't mind please post your email id and phone here.

Thanks,

Lakshman
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Orginally posted by hakuna

thanks teja for the details. just a point for clarification.

pl. refer to my example for the years - some resp agents are assuring to give benefits from 1998. any idea how/why? ultimately, they would need to give me the cesg for those years - so, is there a likely gap in interpretation????

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Man's Best Friend

Thanks for the feedback. An issue that u may clear for me please - What advantage is there of putting money in RESP for which I do not get CESG grant? I seem to miss the point if there is a tax aspect. If there is no advantage, then how is it different if I just kept the money in a bank/ deposit a/c? Pl. clarify. Thanks again.

Quote:

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Orginally posted by hakuna

Thanks for the feedback. An issue that u may clear for me please - What advantage is there of putting money in RESP for which I do not get CESG grant? I seem to miss the point if there is a tax aspect. If there is no advantage, then how is it different if I just kept the money in a bank/ deposit a/c? Pl. clarify. Thanks again.

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Man's Best Friend

Thanks for the feedback. An issue that u may clear for me please - What advantage is there of putting money in RESP for which I do not get CESG grant? I seem to miss the point if there is a tax aspect. If there is no advantage, then how is it different if I just kept the money in a bank/ deposit a/c? Pl. clarify. Thanks again.

Above by Hakuna
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For Trust Plans (individual or group pooled plans)
1) If you put money in a bank and gain interest on it, you have to pay tax on it at the end of the year
2) If you put money in Mutual funds, you may have to pay tax in your bracket on dividends and on capital gains if you redeem part or whole.
3) If you put money in a RESP plan, traditionally the returns have been better than a GIC or CSB and they grow tax free .Also at the end of paying for your child’s education you can roll over any excess to your RRSP account upto a max of $50,000 if you have room.
4) There is a plan in the market, an individual pooled plan, that if your child studies only 13 weeks at a post secondary school all the money you have put into it, including all the fees, can be taken out at one shot and the tax implications are based on your child’s income tax bracket which in general will be lower than yours. This is in case your child decides to drop out or doesn’t decide to go for further studies, you can at least force him/her to attend college for at least 13 weeks and get your money and pay tax at a lower rate. This is a simplistic view of looking at things. Depending upon your situation at that time there are several methods of reducing tax if money is in an RESP plan instead of fixed deposit or savings a/c
For self –directed plans.
Depending upon the plan I can give you the tax benefits of one weighed against the other.

You also have not indicated whether you wish to go for self-directed plans like of the banks or an Educational Trust plan.

Self directed plans may mean mutual funds, where the management expense ratios may be high and that may eat into your returns.Check with your agent what he is offering.

Hope I have been of help.

Lakshman

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Hi
If supose my kids will go in other country(out of canada) for university education then how much money they will get from RESP contribution?

and

Is it mandatory for my kids to complete their study in canada up to grade 12?
If they study out of canada up to grade 12 during their RESP contribution still are they eligible for Resp for their University education?

PLEASE ADVICE ON RESP & RRSP :

I have RESP for my children in RBC since last 2 years. I plan to leave Canada at the end of the 3 years for good. As a Canadian Citizen living overseas, I do not want to pay income taxes in Canada for my world income. Hence to demonstrate that I do not have any ties with Canada, I'll close my bank accounts and stop other investments.

What should I do now? Should I close the RESP & RRSP and withdraw the money after paying taxes or should stop contributing and leave the account to mature after the full period?

Please give your valuable advice.

Rgds.

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