A Registered Education Savings Plan (RESP) is a government-registered savings plan that helps you save for your child’s post-secondary education.

The money that you invest in an RESP grows tax-deferred, and the federal government helps contribute to your savings along the way in the form of education grants.

When your child enrols at a qualifying post-secondary institution and you are ready to withdraw the funds for educational purposes, the payments made using these funds are known as Educational Assistance Payments (EAPs).

Tax is applied to the investment income and government grants received when withdrawn from the RESP, not on the contributions you made using your own funds. These amounts are taxed in the hands of the student, and this usually means little or no tax will be paid, because students typically fall into the lowest tax bracket.