Your tax refund can make saving for education less taxing

Tax Refund as an RESP Investment

There’s almost nothing sweeter than finding out you’ll be receiving a tax refund. All that disciplined saving towards your RRSP, those charitable contributions and that meticulous filing is about to pay off in a windfall with your name on it! Well, before visions of spending sprees take over, consider the more responsible ways you could be using those ‘tax refund’ funds. You could start putting aside money towards next year’s RRSP or even put them into a savings account or use those funds to help set your child up for future success.

Reinvesting a tax refund into a RESP is one of the smartest things a parent can do.

As every parent knows, post- secondary education can help set your child up for future success. Yet saving for tuition can be challenging. That’s where a Registered Education Saving Plan (RESP) comes in; it’s an easy, tax-deferred way to save for your child’s post-secondary education. Using your tax refund can help give your child’s RESP a great jump start. Then, continue with regular contributions and watch your school fund grow over time.  The CST Advantage PlanTM from C.S.T. Consultants even allows cotnributions to be as little as $9.50 monthly and if eligible, flexible payment options are available. 

RESP contributions open the door to government grants.

It literally pays to put money into an RESP. That’s because the government’s Canada Education Savings Grant (CESG) gives you an extra 20% on the first $2,500 contribution you make every year. So if you get a tax refund of at least $2,500, contribute it into your child’s RESP in order to get that extra $500 from the government. You can contribute this amount every year, to collect up to the lifetime maximum of $7,200 in CESG per child.

There’s more. If your family falls into the low to middle income bracket, you may be also eligible to receive additional Canada Education Savings Grants  and also the Canada Learning Bond. Families in Quebec can take advantage of The Quebec Education Savings Incentive (QESI) to receive an extra 10% on the first $2,500 contributed to an RESP each year, up to a lifetime maximum of $3,600 per child. If your family’s income falls below a certain level, you may qualify for another 5%-10% on the first $500 contributed every year too. Meanwhile, eligible families who live in British Columbia can tap into the one-time $1,200 provided by the BC Training and Education Savings Grant (BCTESG).

RESPs grow tax-free until you need them

Investments in RESPs can generate tax-deferred income, so by starting early, your funds can compound and grow tax-free in the plan for years until your child is ready to use them. At that time, since your child could be in the little-to-no income student tax bracket, they may pay little to no taxes on the money they withdraw - pretty much a win-win from every angle!

So once that tax refund arrives, consider the option that can help your money grow tax-free while in the plan, paving the wave for your child’s future. If you already have an CST RESP open (well done!), consider topping up your plan with your tax refund.

If you don’t have an RESP open yet, know that C.S.T. Consultants Inc., has different savings schedules for your RESP  to meet your budget and savings goal.  Talk to a CST Consultants Sales Representative about setting up an RESP today, so that you'll start saving as soon as you receive your tax refund!

Canadian Scholarship Trust Plans are only sold by Prospectus.

Your tax refund can make saving for education less taxing | CST Blog | C.S.T. Consultants Inc.


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