Top 5 questions about Family Rezo

What is a family response?

Canadians can choose from two types of respires: individual and family. Both are registered accounts, which means that they are registered with the federal government, and they let your savings and investments grow on a tax -based basis.

Here are the most important characteristics that you need to know for both types of respons:

• The Lifetime response limit per beneficiary (child) is $ 50,000.
• A beneficiary can have more than one respect (for example, if a parent opens one and a grandparent opens), the maximum contribution is still $ 50,000.
• The Canada Education Savings Grant (CESG) corresponds to 20% of the first $ 2,500 in response per year. That is $ 500 in free money per year!
• If the adjusted income of your family is lower than a certain amount (for 2023, this was $ 106,717), you can also receive the “extra CESG”, which adds up to $ 100 more, after you have contributed your first $ 500 per year.
• The lifelong maximum of the CESG, including extra CESG, is $ 7,200 per child.
• Families with low incomes also receive the Canada Learning Bond (CLB), without personal contribution, up to a lifelong maximum of $ 2,000 per child.
• Families in British Columbia and Quebec have access to extra subsidies: $ 1,200 in British Columbia and up to $ 3,600 in Quebec. (Read more about these provincial and subsidies.)
• You will not receive a tax deduction for contributing to a respect as you would do with a registered pension savings plan (RRSP), but your contributions are not taxed when you are included.
• Government subsidies and growth in a respect Are taxed when it is withdrawn, but they are burdened against the child’s marginal tax rate – which is likely to be very low.
• You can change an individual response at any time into a family respond, as well as adding and removing beneficiaries from the plan.

Now that we have dealt with response principles, we have five of the most common questions about Family Resps tackle.

1. How are funds in a family judge divided over beneficiaries?

Here the flexibility of a family response comes into play. Outside the CLB, government subsidies and the growth of investments can be shared between the beneficiaries of the plan – and the amounts do not have to be the same. So if the training of one child costs more than the other, you can distribute the funds accordingly. You can also start using respect for the post-secondary education of one child, while the other is still in primary school and collects subsidy money. It is nice to have that flexibility.

2. What if one or more beneficiaries do not use their or funds?

In a family response, the unused funds of one child can be assigned to the training of another child. If none of the beneficiaries go to school, you could keep the plan open in case they change his mind.

You can also transfer unused income in the respect to the RRSP of your or your partner as an accumulated income payment (AIP). The transfer limit is $ 50,000 and you should return any government subsidies. Three other requirements to be aware: you must have sufficient RRSP -contributing space to make the transfer; The respect must have been open for at least 10 years; And the beneficiaries must be 21 years or older and do not follow further education.

If you do not intend to add more beneficiaries to the plan and you no longer need the responds, you can close it. If it is eligible, your original contributions will be included tax-free, but you pay tax on investment profits-tags if they are transferred to your RRSP as AIP.