Canadians can save more money tax-free than ever before but a new survey suggests only a small majority of parents are taking advantage of Ottawa’s primary vehicle for educational savings.
A survey from the Chartered Professional Accountants of Canada released Tuesday found 47 per cent of parents have not opened a registered education saving plan, which shelters money tax-free but also provides a government grant equal to 20 per cent of contributions up to a maximum of $500 annually and $7,200 lifetime per child.
“I think potentially there is a lack of awareness, or simply other budgeting priorities. A lot of people these days are maxed out,” said Cairine Wilson, vice-president, corporate citizenship with CPA Canada. “Some people might think they’ll get to it later on.”
Peter Lewis, vice-president of regulatory, risk and corporate affairs with CST Consultants Inc. which distributes the Canadian Scholarship Trust, said there is a strain of thought among some parents that post-secondary education is not their responsibility. “They expect their kids to do it on their own,” he said.
The fact that almost half of Canadian parents are not taking advantage of the ability to maximize their RESP grant comes as the government announced plans this month to increase annual contribution limits to tax-free savings accounts from $5,500 to $10,000. Unlike TFSAs, some withdrawals in an RESP are taxable in the hands of the beneficiary but usually that person is a child with little income because he or she is enrolled in a post-secondary institution.
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