Helping more families save for their children's post-secondary education

In 2004, Canadian Scholarship Trust Foundation actively participated in discussions with the federal and Alberta governments that led to the introduction of the Canada Learning Bond, additions to the Canada Education Savings Grant, and the Alberta Centennial Education Savings Plan. These incentives are designed to assist families with saving for their children's post-secondary education.

Canada Learning Bond

1. What is the Canada Learning Bond (CLB)?

The CLB is a grant from the federal government of up to $2,000 for post-secondary education of children in lower income* families. The grant is paid into an RESP, such as the Canadian Scholarship Trust Plan. (*Income levels are indexed to keep pace with inflation and are revised annually by CRA.)

2. Who can get the CLB?

Canadian children born January 1, 2004 or later who are eligible for the National Child Benefit Supplement (NCBS). This generally applies to families with a total annual income under $37,885.

3. How is the total annual income determined?

It is the combined net income of the primary caregiver and the spouse of the primary caregiver of the child.

4. What do families get?

An initial $500 will be provided in the first year of eligibility for the CLB. Children are also eligible to receive up to 15 additional $100 grants, one for each year the family qualifies for the NCBS until the year the child turns 15.

5. How does it work?

The CLB will be paid into your Canadian Scholarship Trust Plan RESP. It will be invested along with any RESP contributions that you make, and will earn and accumulate investment income inside your RESP. As your RESP administrator, we will manage the assets of your grant and interest earned, and will provide you with account balance updates.

6. How will my child receive the CLB?

When your child enrolls in a qualifying post-secondary institution, the CLB will be paid to your child from the RESP as Education Assistance Payments (EAPs). EAPs will include, among other components, the CLB, interest earned on the CLB and interest earned on any additional contributions that you put into the RESP. EAPs are taxable in the student's name. Since students usually have a lower income, little or no tax will be payable on the EAP. Your contributions will be returned to you tax-free.

7. What happens if my child does not attend a post-secondary institution?

• The CLB will be returned to the government.
• Any RESP contributions that you have made will be returned to you.
• You may be able to transfer the interest earned on the CLB and the interest earned on your own RESP contributions to your RRSP or spousal RRSP tax-free, provided you have RRSP contribution room. Or, you may withdraw the interest as taxable income and pay an additional 20% penalty tax.

8. Can I transfer the CLB to another child?

No, the federal government will not allow the CLB to be transferred from one child to another.

9. How do I apply for the CLB?

An application form will need to be completed by the child's primary caregiver, directing the CLB to be placed into your RESP. Use one of the links below to review and download a copy of the application form:

• CESG and CLB Application = Apply for the Basic/Additional Canada Education Savings Grant and the Canada Learning Bond
• CESG and CLB Application = Apply for the Basic/Additional Canada Education Savings Grant and the Canada Learning Bond - for the contributor who is also the custodial parent and the primary caregiver

Additional Canada Education Savings Grant

1. What is the additional Canada Education Savings Grant (CESG)?

The additional CESG is the same as the regular CESG, except the federal government will increase its 20% matching rate on the first $500 of eligible RESP contributions each year for families who qualify. The grant is paid into an RESP, such as the Canadian Scholarship Trust Plan.

2. When does it take effect?

It applies to RESP contributions made on or after January 1, 2005.

3. Who qualifies for the additional CESG?

Families with a total annual income below $75,769 qualify. Total family income is defined as the combined net income of the primary caregiver and the spouse of the primary caregiver of the child.

4. What do families get?

1. For families with a total annual income below $37,885, the federal government will double the matching rate to 40% on the first $500 of eligible contributions that you put towards your child's RESP each year. Plus, they will match 20% on any additional eligible RESP contributions up to $2,000 each year. This could add up to $600 in CESG per year, up to $7,200 over the life of your RESP for each child.
2. For families with a total annual income between $37,885 and $75,769, the federal government will increase the matching rate to 30% on the first $500 of eligible contributions that you put towards your child's RESP each year. Plus, they will match 20% on any additional eligible RESP contributions up to $2,000 each year. This could add up to $550 in CESG per year, up to $7,200 over the life of your RESP for each child.

In addition, the CESGs and your RESP contributions will earn tax-sheltered investment income inside the RESP.

5. What are eligible contributions?

Eligible contributions refer to your contributions that you put into an RESP. They do not include other government grants such as the Canada Learning Bond or Alberta Centennial Educations Savings Plan. For example, you may qualify for and receive both the CLB and additional CESG, however, the CESG matching rate will only be applied to your personal contributions that you put towards your child's RESP.

6. What if my family income is over $75,769?

For families with a total annual income over $75,769, the regular CESG matching rate remains unchanged at 20% on all eligible RESP contributions, up to $2,500 per year for each child. This could add up to $500 in CESG per year, up to $7,200 over the life of your RESP for each child.

7. How will my child receive the CESG?

When your child enrolls in a qualifying post-secondary institution, the CESG will be paid to your child from the RESP as Education Assistance Payments (EAPs). EAPs will include, among other components, the CESG, interest earned on the CESG and interest earned on your eligible contributions. EAPs are taxable in the student's name. Since students usually have a lower income, little or no tax will be payable on the EAP. Your eligible contributions (your principal) will be returned to you tax-free.

8. What happens if my child does not attend a post-secondary institution?

You have three options:

1. You can transfer the RESP to another child.
2. Under certain conditions, you may transfer up to $50,000 of the interest, earned in your RESP to your RRSP or spousal RRSP tax-free, provided you have RRSP contribution room. Your principal will be returned to you tax-free.
3. You may withdrawal the interest as taxable income and pay an additional 20% penalty tax. In this case, your principal will be returned to you tax-free and the CESG will be returned to the government.

9. How do I apply for the additional CESG or basic CESG?

You will need to complete an application form directing the CESG to be placed into your RESP. Use one of the links below to review and download a copy of the application form:

• CESG and CLB Application = Apply for the Basic/Additional Canada Education Savings Grant and the Canada Learning Bond
• CESG and CLB Application = Apply for the Basic/Additional Canada Education Savings Grant and the Canada Learning Bond - for the contributor who is also the custodial parent and the primary caregiver

As your RESP administrator, we will manage and track your CESG and interest earned on your CESG, and will provide you with account balance updates.

10. Does the carry-forward provision apply to the additional CESG?

No. The government does not allow you to carry forward any unused CESG grant room from one year to the next for the additional CESG. Therefore, if you qualify, it is very important to apply for the additional CESG today! The longer you wait, the more CESG you will lose. You do not want to miss out on this benefit and lose government grant money that you are entitled to receive.

The Alberta Centennial Education Savings Plan

1. What is the Alberta Centennial Education Savings Plan (ACES)?

ACES is a grant from the Alberta government of up to $800 to encourage families to save for their children's post-secondary education. The grant is paid into an RESP, such as the Canadian Scholarship Trust Plan.

2. Who can get the ACES grant?

The ACES grant is available to all children born to or adopted by Alberta residents . Families who reside in Alberta at the time of applying for the ACES grant are eligible, regardless of family income.

3. What do families get?

The Alberta government will provide an initial ACES grant of $500 for children born to or adopted by Alberta residents on or after January 1, 2005. Three subsequent ACES grants of $100 each will be available to children enrolled in school in Alberta who turn 8, 11 and 14 on or after January 1, 2005

4. How does it work?

The ACES grant will be paid into your Canadian Scholarship Trust Plan RESP. It will be invested along with any additional RESP contributions that you make, and will earn and accumulate investment income inside your RESP. As your RESP administrator, we will manage and track your grant and interest earned, and will provide you with account balance updates.

5. How will my child receive the ACES grant?

When your child enrolls in a qualifying post-secondary institution, the ACES grant will be paid to your child from the RESP as Education Assistance Payments (EAPs). EAPs will include, among other components, the ACES grant, interest earned on the ACES grant and interest earned on any additional contributions that you put into the RESP. EAPs are taxable in the student's name. Since students usually have a lower income, little or no tax will be payable on the EAP. Your contributions will be returned to you tax-free.

6. What happens if my child does not attend a post-secondary institution?

• The ACES grant will be returned to the Alberta government.
• Any RESP contributions that you have made will be returned to you.
• You may be able to transfer the interest earned on the ACES grant and the interest earned on your own RESP contributions to your RRSP or spousal RRSP tax-free, provided you have RRSP contribution room. Or, you may withdraw the interest as taxable income and pay an additional 20% penalty tax.

7. Can I transfer the ACES grant to another child?

Yes. The grant can be transferred to a sibling of your child.

8. How do I apply for the ACES grant?

You will need to complete an application form directing the ACES to be placed into your RESP. Use the links below to review and download a copy of the application form:

• ACES Application = Apply for the Alberta Centennial Education Saving Grant

Quebec Education Savings Incentive

Saving is 30% easier in Quebec

20% on your money. Guaranteed.
The Canadian Education Savings Grant (CESG) adds 20% to 40% to the first $500 you contribute each year, and 20% to the next $2,000 - up to $7,200 over the life of your plan. Eligibility requirements apply.

Plus another 10% if you live in Quebec!

The Quebec Education Savings Incentive (QESI) helps you save even more, adding 10% to you contribution, up to $250 each year.
The maximum basic benefit is $250 each year with a lifetime maximum benefit of $3,600 per child.