Saving Plans:

Registered Education Saving Plan (RESP):

  • A Registered Education Savings Plan (RESP) is a saving program that helps you save for your child’s post-secondary education.
  • Government of Canada contributes 20% of each dollar that the subscriber contributes in the plan, as long as the saved money is spent towards the child’s college or university education.
  • You can open an RESP for your child or another family member who is under 21 of age.
  • The maximum amount for an RESP is $50,000.
  • After high school, if your child is enrolled in an eligible college or university program, they will receive this money to cover some or all of their education costs.
  • Interest from investment income in an RESP is not taxed.
  • RESP’s have different restrictions and structures, so it is a good idea to look at different options and to ask questions before you open RESP account.

Registered Retirement Saving Plan (RRSP):

It is a tax-sheltered account, registered with Canada Federal Government, that you use to save for you and your spouse retirement. Must be withdrawn or converted to Annuity at age 71. Several benefits to saving in RRSP:

  • Contributions are tax-deductible.
  • Growth of Savings are tax free.
  • A spousal RRSP can reduce your combined tax burden.
  • You can convert your RRSP to get regular payments at retirement.
  • You can borrow from your RRSP to purchase your first home or to pay for your education.

Tax Free Savings Account (TFSA):

  • It is a flexible investment account that can help you meet both your short and long-term savings goals. Generally, interest, dividends, or capital gains earned on investments in a TFSA are not taxable either while held in the account or when withdrawn.
  • All Canadian residents, aged 18 or older, can contribute to TFSA.
  • It allows you to set money aside in eligible investments and watch those savings grow tax-free throughout your life-time.
  • Interest, dividends, and capital gains earned in a TFSA are tax-free.
  • Your TFSA savings can be withdrawn from your account at any time, for any reason, and all withdrawals are tax-free.
  • TFSA assets can generally be transferred to a spouse or common-law partner upon death.