RESPs come with more tax benefits than you might expect. First, your money grows tax-sheltered—so there’s no tax to pay while your investments grow, and you won’t receive any tax slips each year. Government grants like the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB) are added to your RESP and grow tax-free right alongside your contributions.

When it’s time to use the funds for school, the money is withdrawn in your child’s name—not yours. That means the earnings and grants are taxed at the student’s tax rate, which is usually very low. In many cases, there’s little or no tax to pay at all. Plus, the money you originally contributed comes back to you tax-free.

If your child doesn’t end up using the RESP, you may still be able to transfer the earnings into your RRSP, as long as you have contribution room—so you can keep growing your money tax-deferred. With an RESP, you’re not just saving—you’re doing it in one of the most tax-smart ways possible.