The CESG: Free Government Money for Your Kid's Education
If you’re saving for a child’s education in Canada and you’re not using an RESP, you’re likely leaving free money on the table. Here’s why.
The deal: a 20% top-up
When you contribute to a Registered Education Savings Plan (RESP), the government chips in through the Canada Education Savings Grant (CESG) — an extra 20% on top of your contributions.
- Contribute $2,500 in a year → get the maximum $500 grant.
- The grant has a lifetime maximum of $7,200 per child.
A guaranteed 20% return, before your investments earn anything, is something almost no other account offers. See it add up in the RESP calculator.
The magic number: $2,500 a year
To collect the full $500 grant each year, contribute $2,500 annually. Do that and you’ll hit the $7,200 lifetime grant in about 14–15 years — comfortably within a child’s pre-university window.
| You contribute (per year) | CESG grant (per year) | It’s like an instant… |
|---|---|---|
| $1,000 | $200 | 20% return |
| $2,500 | $500 (the yearly max) | 20% return |
| $5,000 | $500* | 10% return |
*The basic grant is capped at $500/year, so contributing more than $2,500 in a year doesn’t earn extra grant (unless you’re catching up missed room — see below).
Missed a year? You can catch up
CESG room carries forward. If you missed contributing in past years, you can catch up one extra year at a time — contributing up to $5,000 in a year to receive up to $1,000 of grant. You can’t claim all missed years at once, so starting early (or catching up steadily) matters.
Extra help for lower-income families
On top of the basic 20%, families with lower income can receive:
- Additional CESG — an extra 10–20% on the first $500 contributed each year.
- The Canada Learning Bond (CLB) — up to $2,000 per child, with no contribution required at all.
If you might qualify, it’s well worth setting up an RESP just to access these.
How the money is taxed later
- Your original contributions come out tax-free — it was already your after-tax money.
- The grants and investment growth are taxed in the student’s hands when withdrawn for school. Since most students have little income, this is usually taxed at a very low or zero rate.
That’s a great deal: tax-deferred growth that’s eventually taxed at the child’s low rate, plus the grant on top.
The takeaway
- Open an RESP and contribute $2,500/year to capture the full $500 CESG annually.
- Don’t leave the $7,200 lifetime grant unclaimed — start early.
- Lower-income families should check for extra CESG and the Canada Learning Bond.
Model your contributions, the grants, and the growth in the RESP calculator.
This is general education, not financial advice. Grant rules and limits can change — confirm current details with the federal government.