In Canada, a Registered Education Savings Plan. An RESP allows parents (or other relatives) to save for their child's education with certain tax benefits - like an RRSP, the money grows tax-free, although unlike an RRSP, RESP contributions are not tax deductible. However, as tuition expenses are already tax deductible, this isn't a significant hindrance. As an additional incentive, for every year a contribution is made to an RESP for a child under 18, the government will kick in a 20% grant up to a maximum of $400. (For children 16 and 17, the grant will only be paid if minimum contributions have been made to the plan in earlier years.)

In 1999, the government introduced a RESP grant carry-forward dating to 1998, so that grants for new contributions will be issued as if grant room had been accumulating since 1998 - but obviously this will only affect large contributions. The contribution limit for an RESP is $4000 in any calendar year. Government grants are only issued if the child has a SIN and the parents can provide proof of age and proof of canadian residency. The government grant was introduced to make RESPs more attractive than just having an In Trust account for the child, since RESPs also have a 20% growth tax are and taxed at your marginal rate if the child does NOT end up using the RESP to go to school. This is better than the old rules, in which ALL growth in an RESP went to a designated school if your child didn't use it for education, but some still argue that just having an in-trust account is better because in many provinces the lower income will make the child eligible for additional bursaries and grants that needn't be paid back at all. It's all pretty messed up and you should see a financial planner if you're really worried about the nickels and dimes of the taxation laws involved.

Personally I think RESPs are a good idea, if only because the registeredness of them, and thus the hassle of deregistering them, means that parents will be less likely to cash out the RESP in a pinch.

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