Registered Education Savings Plan Dealers Say Enhancements to the RESP
Will Encourage More Families to Save More for Their Children's Post
TORONTO, March 20 /CNW/ - The Government of Canada's proposed changes to
RESPs and its popular Canada Education Savings Grant program are "a very
positive leap forward for Canadian families".
That's the resounding verdict of the members of the Registered Education
Savings Plan Dealers Association of Canada (RESPDAC), which represents four of
the leading providers of RESP's across the country. The proposed improvements
were outlined in the federal Budget for 2007, released in Ottawa yesterday.
"We are extremely pleased with all of the proposed changes," said Peter
Lewis, newly-elected Chair of RESPDAC. "These improvements will benefit all
Canadian families, and provide even greater incentive to invest in their
children's college or university education. And that's good for everyone.
"We sincerely commend Finance Minister Flaherty and his advisors and
staff for recognizing the value and importance of encouraging families to save
for post-secondary education. We believe that it's an integral part of a
long-term strategy to improve access to higher learning, and we hope all
federal political parties will support these provisions."
Among the highlights of the budget, relating to post-secondary education,
- The $4,000 annual per-plan RESP contribution limit will be
eliminated, and the lifetime RESP contribution limit (per child) will
be increased to $50,000 from $42,000.
- The maximum annual RESP contribution qualifying for the 20-per-cent
Canada Education Savings Grant (CESG) will be increased to $2,500
from $2,000, thus increasing the maximum CESG per beneficiary for
2007 and subsequent years to $500 from $400. The maximum CESG for a
year will increase to $1,000 from $800 if there is unused grant room
because of contributions of less than the maximum CESG-eligible
contributions for previous years.
- A relaxation in eligibility rules to accommodate qualifying part-time
students that do not meet the existing 10 hours per week study
requirement, but require that at least 12 hours per month be spent on
courses. Under this proposal, students 16 years of age or older will
be able to receive up to $2,500 of benefits from their RESP for each
13-week semester of part-time study.
- Budget 2007 proposes to introduce a new non-refundable child tax
credit for parents based on an amount of $2,000 (indexed) for each
child under the age of 18 years at the end of a taxation year. This
new tax credit will take effect beginning in 2007, and will provide
personal income tax relief of up to $310 per child. This move will
free up funds within families; we anticipate some of these funds will
be set aside in an RESP for their children's post-secondary
"Going to college or university has become a much greater priority for
Canadian students over the last several years," said Mr. Lewis. "In fact, a
recent federal study estimated that more than 70 per cent of new jobs created
in Canada now require some form of post-secondary education. But without years
of savings - along with grants from the Government to augment those savings -
the cost of post secondary education can be prohibitive for many students and
According to Statistics Canada, the national average of university
tuition and fees alone (not including residence and other living costs) is
nearly $4,400 in Canada today. These costs can go up to more than $14,000 per
year, when residence and other expenses are added. At a 5% rate of escalation,
tuition and living expenses could increase to a total of over $120,000 for a
child born today, and enrolling in a four-year university program in 2024.
"The proposed improvements in the federal Budget - especially the
increase in the lifetime contribution limit - are fortunately recognizing this
challenge," Mr. Lewis said. "But as pleased as we are, our members will
continue to push governments at both the federal and provincial levels to
improve existing programs, and develop new ones, to enable more students to
learn, compete, and contribute to a better Canada."
The Registered Education Savings Plans Dealers Association of Canada
(RESPDAC) represents the four leading national group RESP Dealers, including
CST Consultants Inc., Children's Education Funds Inc., Heritage Education
Funds Inc., and USC Education Savings Plans Inc. Through each of its member
companies, RESPDAC works to help Canadian families prepare for the cost of
For further information:
For further information: James Deeks, Executive Director, RESPDAC,
Phone: (416) 689-8421, Email: firstname.lastname@example.org