What is the Canada Education Savings Grant (CESG)?

The Canada Education Savings Grant (CESG) is free money provided by the government towards your child’s future post-secondary education.  

Funds are deposited directly into your kid’s (the beneficiary’s) Registered Education Savings Plan (RESP) account and will continue to grow tax-free until withdrawal.

Depending on a family’s net income, kids may also be eligible to receive an additional grant, referred to as the additional CESG (A-CESG).

Eligibility for the Canada Education Savings Grant

The CESG is available to your child until the end of the year they turn 17 as long as:

  • They are a Canadian resident; and
  • They have a valid social insurance number; and
  • They have an RESP account opened in their name; and,
  • An application has been made for the grant.

Related: How To Maximize Your Canada Child Benefits

How much CESG money will you receive

Unlike the Canada Learning Bond, you have to make a contribution to your child’s RESP in order to receive the CESG funds.

Basic CESG

The government will contribute 20 cents for every $1 you contribute up to a maximum of $500 per child per year. To receive the maximum grant of $500 in any particular year, you would need to contribute at least $2,500 for that year (i.e. $2,500 x 20%).

Additional CESG

Low to middle-income families may be eligible for additional grants known as the A-CESG. Depending on a family’s net income, the additional grant is 10-20% on the first $500 contributed to your child’s RESP each year. Families with a net income:

  • Less than $47,630, are eligible for an additional 20% in grants on the first $500 contributed (i.e. $100).
  • Between $47,631 and $95,259, are eligible for an additional 10% in grants on the first $500 contributed (i.e. $50).

The additional grant is reviewed annually based on the adjusted family net income level shown on your tax return for the previous tax year. For 2020, your 2019 tax return is used.

Example: Assume you make an annual RESP contribution of $2,500 to your kid’s RESP.

Unused RESP room can be carried forward and contributed in future years. The maximum lifetime limit receivable as grants through the CESG is $7,200.

Related: Setting Up A TD e-Series RESP Portfolio

Applying for the CESG

Receiving the CESG is easy. Simply open an RESP account at a financial institution of your choice for your child. Request that the bank (RESP provider) apply for the CESG (and A-CESG, if eligible) on your behalf.

Final Thoughts

College or any other post-secondary education can be pretty expensive. Government grants provided through the CESG can lessen the burden by providing you with free money to save. The free funds are essentially a guaranteed 20% return on your investment!

Consider giving your kids a leg-up by contributing to an RESP early and using compound interest and time to your advantage. Your child will thank you!

Also Read: 

This article was originally published in 2017 and is regularly updated.

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Author

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Enoch Omololu

Enoch Omololu is a personal finance expert and a veterinarian. He has a master’s degree in Finance and Investment Management from the University of Aberdeen Business School (Scotland) and has completed several courses and certificates in finance, including the Canadian Securities Course. He also has an MSc. in Agricultural Economics from the University of Manitoba and a Doctor of Veterinary Medicine degree from the University of Ibadan. Enoch has a passion for helping others win with their personal finances and has been writing about money matters for over a decade. His writing has been featured or quoted in the Toronto Star, The Globe and Mail, MSN Money, Financial Post, Winnipeg Free Press, CPA Canada, Credit Canada, Wealthsimple, and many other personal finance publications.

His top investment tools include Wealthsimple and Questrade. He earns cash back on purchases using KOHO and monitors his credit score for free using Borrowell.

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