Q and A: Can you explain BC-specific children RESP grants?

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QandA BC specific children RESP grantsQuestion:

Earlier this year, I heard about a new grant for children’s RESPs that are specific to BC.What is this grant and will my grandchildren qualify?

Answer:

Yes, the BC Training and Education Savings Grant was introduced this year. It is meant to help families start planning and saving early for education beyond high school. All BC resident children born on or after January 1, 2007 are eligible to receive this one-time grant of $1200, which is received when the child is six years old, but only if they have an RESP (Registered Education Savings Plan) set up before the child turns seven years old.

This grant of $1200 is valuable, as it may grow substantially over time. The grant is to be used towards any qualifying post-secondary education across Canada or even outside of Canada, including for apprentices, trade schools, colleges, universities, and other certified educational institutions. The grant grows tax-free within the RESP and the grant funds are eventually paid out and taxed in the hands of the student.

Because many students have little or no income during their post-secondary years, the student can usually withdraw the grant money without paying any tax on it. Grandparents and/or parents are able to set up RESPs in their name, with the children as beneficiaries of the account.

RESPs are a wonderful way to save whether the child qualifies for the new BC grant or  not; every dollar that is contributed to an RESP, up to defined limits, is matched by the Canadian government by at least 20%. To learn more about this new grant and RESPs, please contact your Financial Advisor.