Tax Benefits
An RESP is a tax shelter, designed to benefit post-secondary students. With an RESP, contributions (comprising the investment's principal) are, or have already been, taxed at the contributor's tax rate, while the investment growth (and CESG) is taxed on withdrawal at the recipient's tax rate. An RESP recipient is typically a post-secondary student; these individuals generally pay little or no federal income tax, owing to tuition and education tax credits. Thus, with the tax-free principal contribution available for withdrawal, CESG, and nearly-tax-free interest, the student will have a good source of income to fund his or her post-secondary education.
Read more about this topic: Registered Education Savings Plan
Famous quotes containing the words tax and/or benefits:
“In 1845 he built himself a small framed house on the shores of Walden Pond, and lived there two years alone, a life of labor and study. This action was quite native and fit for him. No one who knew him would tax him with affectation. He was more unlike his neighbors in his thought than in his action. As soon as he had exhausted himself that advantages of his solitude, he abandoned it.”
—Ralph Waldo Emerson (1803–1882)
“In America the young are always ready to give to those who are older than themselves the full benefits of their inexperience.”
—Oscar Wilde (1854–1900)