If you’re already in school it might be too late to benefit a whole lot from the Canada Learning Bond, but it’s not too late for other young Canadians that you might know. That CLB is another one of these programs that basically gives away free money to Canadians and gets woefully underused. The basic idea is that the government is willing to throw money at you just for having the small amount of ambition it takes to open an RESP account for a young Canadian. How much are the feds willing to toss your way? Just for having an RESP plan in place (you don’t even have to money in it – although you’d kind of be crazy not to if you have kids) the government will wire you a cool $500 up front, cover a $25 fee for opening the account, and throw in another $100 every year (to a maximum of $2,000 overall). That’s right, 2K just for getting a social insurance number for yourself and your child, and then making one trip to your financial institution to sign a couple of papers.For those of you keeping track at home that means the federal government is helping you save for your child’s education in three pretty cool ways:
1) The CLB – They just give you fat stacks.
2) The Canada Education Savings Grant (CESG) – You toss in a little and show the government crew you mean business, and they’ll chip in some more (up to $7,200 more).
3) Taxation Advantages – All the investment gains made inside an RESP account (on both your contribution and the free money the government contributes) gets taxed in the poor grasping hands of the student beneficiary. This basically means that almost no tax gets paid – and if it is taxed it is in the lowest tax bracket.
Related: RESP Rules – Not Exactly Tax Free
Who Gets This Free Money?
No, you don’t have to meet 26 pages’ worth of qualification to get this 2K. It’s quite simple, If you are:
a) Born after December 31, 2003
b) Your part of a family that receives the National Child Benefit Supplement (NCBS) – aka “family allowance” (annual income under$44,000 or so)
Then you are in luck! This does not replace or impact the CESG btw, which is still available. It also doesn’t impact some of the provincial help that has been cropping up in the form of added incentives to throw money in an RESP.
They’ll Thank You – After Those Scary Teenage Years Pass
If you were to earn a measly 3% return on your investments within the RESP, that $500 the government is willing to part with, plus the $100 a year would total about $2,800 when the recipient graduates high school and is looking at college, university, or several other credential programs.
About 290,000 Canadians have been able to take advantage of the Canadian Learning Bond so far. If you have a child, grandchild, niece, nephew, or just a young Canadian in your life that you care about, saving for their post-secondary education has never been easier (or more needed if you consider how quickly the costs of college and university are spiraling upwards, as well as how important that education now is in the job market).