RESP Jan 2011 by ACCA


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Canada Registered Education Savings Plan, OSAP, Child benefit, Investors education.
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RESP Jan 2011 by ACCA

  1. 1. CANADIAN EDUCATION SAVINGS OUTREACH PROGRAM (CCESOP): By CEDI in Montreal Centre d'éducation et de dévéloppement interculturel Intercultural Development and Education Center   By ACCA in Toronto
  2. 2. <ul><li>Sponsor: Human Resources and Social Development of Canada </li></ul><ul><li>Mandate: Help you Save Early, Save More for your Children’s Post-Secondary Education </li></ul><ul><li>Website: </li></ul>
  3. 3. Child Benefit in Canada/Ontario <ul><li>CCTB </li></ul><ul><li>UCCB </li></ul><ul><li>OCB </li></ul>
  4. 4. Income Tax & Family Benefits Taxable Income 0- 10,320 10,320- 36 , 848 36 ,020 - 40,726 40,726 - 64,882 Tax Rate 0 21 .05 % 24.15% 31.15% 64,882- 74,698 74,698- 76,440 76,440- 81,452 81452- 126,264 OVER 126,264 32.98% 35.39% 39.41% 43.41% 46.41%
  5. 5. Canada Child Tax Benefit - CCTB <ul><li>CCTB : Basic & NCBS (National Child Benefit Supplement) </li></ul><ul><li>Family Net Income below $23,855 , Full amount NCBS & CCTB 。 </li></ul><ul><li> </li></ul><ul><li>Basic NCBS Per Year Per Month </li></ul><ul><li>1st Child $1255 $1945 $3,200 $266.67 </li></ul><ul><li>2nd Child $1255 $1720 $2975 $247.92 </li></ul><ul><li>3rd Child $1343 $1637 $2980 $248.33 </li></ul><ul><li>Family Net Income above $ 40,726, No NCBS within 3 children </li></ul><ul><li>Family Net Income above $110,000 , No CCTB within 2 children </li></ul>
  6. 6. Universal Child Care Benefit - UCCB <ul><li>Universal Child Care Benefit : $100 per month per child under the age of 6 , regardless of family income </li></ul><ul><li>Automatic Payment </li></ul><ul><li>Make up for 11 months missed (delayed application) </li></ul><ul><li>Taxable :Taxed under lower income parent </li></ul>
  7. 7. Ontario Child Benefit - OCB <ul><li>Ontario Child Benefit : All children under 18; Family Income </li></ul><ul><li>Automatic payment </li></ul><ul><li>July 20, 2007 ; $250/y(2007) , $600/y (2008), $1100/y (2009), $1300/y (2010) 。 Monthly since July 2008 </li></ul><ul><li>$92 per month for 1st child </li></ul><ul><li>Family Income above $20,000, decrease at 8% </li></ul>
  8. 8. “ Registered” Accounts in Canada <ul><li>RRSP (Registered Retirement Savings Plan) </li></ul><ul><li>TFSA (Tax Free Savings Account): </li></ul><ul><li>RESP : (????) </li></ul>
  9. 9. R EGISTERED E DUCATION S AVINGS P LAN <ul><li>Is it too good to be true? </li></ul>RESP
  10. 10. So I need a Plan… <ul><li>If my child was born 2010, his Post-secondary education will cost $85,734*. That could rise to $136,186 * if my child lives away from home. </li></ul>
  11. 11. Where can I get MONEY? <ul><li>For Sure the Canadian government is always there to help, but: </li></ul><ul><li>They also encourage families to help themselves first and foremost, and </li></ul>
  12. 12. Why should I bother RESP? <ul><li>We are struggling for survival, No E xtra Money to put aside. </li></ul><ul><li>I’ve been called up by quite a few RESP agents and get annoyed. </li></ul><ul><li>Can I buy stocks in my RESP? </li></ul><ul><li>My friend told me RESP will affect my children’s OSAP application. </li></ul>
  13. 13. Why should I bother RESP after all? <ul><li>Tax Free growth. </li></ul><ul><li>Quite likely: Tax Free withdrawal. </li></ul><ul><li>Government will even give FREE MONEY! </li></ul><ul><li>(For Low income family) </li></ul><ul><li>Government will add money on top of my Money. </li></ul>
  14. 14. Why should I bother RESP after all?
  15. 15. Why should I start early? Based on a monthly $100 contribution, earning 6% tax-free compounded interest
  16. 16. Free Money! Canada Learning Bond (CLB) <ul><li>Can I get it? </li></ul><ul><ul><li>My Child must be born on or after January 1 st , 2004 </li></ul></ul><ul><ul><li>I must receive the National Child Benefit Supplement ( NCBS ) as part of CCTB </li></ul></ul><ul><li>How to Apply? </li></ul><ul><ul><li>My RESP provider applies on my behalf (Reminder on Provider) </li></ul></ul>
  17. 17. Canada Learning Bond (CLB) <ul><li>How much can I get? </li></ul><ul><li>$500 when RESP opened </li></ul><ul><li>Afterwards, $100 per year, until child reaches $15 </li></ul><ul><li>lifetime total of $2,000 </li></ul>
  18. 18. WH O CAN OPEN AN RESP ACCOUNT? <ul><li>Case 1: Canadian Citizen </li></ul><ul><ul><li>Birth Certificate </li></ul></ul><ul><ul><li>Certificate of Canadian Citizenship </li></ul></ul><ul><li>Case 2: Permanent Resident </li></ul><ul><ul><li>Permanent Resident Card </li></ul></ul><ul><li>Case 3: Temporary Residents </li></ul><ul><ul><li>Work Permit </li></ul></ul><ul><ul><li>Study Permit </li></ul></ul>
  19. 19. SOCIAL INSURANCE NUMBER (SIN) <ul><li>SINs for the subscriber and beneficiary </li></ul><ul><li>Note: SINs that begin with a “9” are not eligible to open an RESP account </li></ul><ul><li>Service Canada </li></ul>
  20. 20. As long as I save, no matter how little..
  21. 21. Canada Education Savings Grant (CESG) <ul><li>Can I get CESG? </li></ul><ul><ul><li>RESP opened for my child. </li></ul></ul><ul><ul><li>Up to 17 years old. </li></ul></ul><ul><ul><li>SIN for Me and My child. </li></ul></ul><ul><li>How can I apply? </li></ul><ul><ul><li>RESP providers apply on my behalf </li></ul></ul>
  22. 22. Canada Education Savings Grant (CESG) <ul><li>Basic CESG </li></ul><ul><ul><li>20% within $2,500 </li></ul></ul><ul><ul><li>Every Family </li></ul></ul><ul><li>Additional CESG (Reminder on Provider) </li></ul><ul><ul><li>First $500 </li></ul></ul><ul><ul><li>Low and Mid-income families </li></ul></ul><ul><li>I must Put in money to get this grant </li></ul>
  23. 23. A dditional CESG For F irst $500 annual contribution Family Net Income Level Basic Additional Total $ 41,544 or less 20% 20% 40% $ 40,970-- $83,088 20% 10% 30% $ 83,088 or more 20% NA 20%
  24. 24. Numbers I Need to Know Annual contribution for grant: $2,500 Carry-forward policy allow Make Up for missed years Total Grant: Up to $7,200 lifetime per child Total Contribution: Up to $50,000 lifetime per child Maximum Grant Available Per Year (carry forward) Contribution Required Percent of Capital $1,000 $5,000 20%
  25. 25. <ul><li>Future of my Money: </li></ul>Future of My Money
  26. 26. If I can afford $500 per year ( Family Income under $40,000) : I save $500 each year : Government will Give me: First Year: $ 700 Afterwards : $300 Per Year
  27. 27. After 14 Years
  28. 28. If I can afford $2500 per year I save $2500/y Get Basic CESG : $500/y Lifetime CESG: $7200
  29. 29. After 14 years
  30. 30. Using my RESP..
  31. 31. Using my RESP <ul><li>Get back my contribution: One time, Tax Free </li></ul><ul><li>Get Educational Assistance Payments for my Child (EAP) </li></ul><ul><ul><li>EAP= Government Grants + Earnings </li></ul></ul><ul><ul><li>My child must be a Canadian resident to use EAP </li></ul></ul><ul><ul><li>My child must attend post-secondary school to use Government Grants </li></ul></ul><ul><li>EAP Taxed at hand of My Child </li></ul>
  32. 32. If my child doesn’t attend University <ul><li>I can: </li></ul><ul><ul><li>Wait, RESP account can stay open for up to 36 years </li></ul></ul><ul><ul><li>Transfer Earnings and Grants to a sibling </li></ul></ul><ul><ul><li>Transfer the earnings Tax-Free to my Registered Retirement Savings Plan ( RRSP ) </li></ul></ul><ul><ul><li>I can withdraw the taxable earnings and pay tax (20%+ regular tax rate) </li></ul></ul>
  33. 33. Which RESP works for Me?
  34. 34. Before Invest, Investigate
  36. 36. Major Group Plans
  37. 37. Compare Plans I can make regular deposit I love investment; I can’t make regular deposit Good for Me if Restriction on contribution and withdrawal. Cancellation Penalty;Protection of capital and 6% return rate on average. Flexible Risk of capital loss Pros &Cons Entrance Fee and Annual Management Fee Management Fee, Transaction Fee , Commission Fee Low-Risk Mutual Funds and Bonds Saving Account , GICs , Stock , Mutual Funds What Group Plan Dealers, Banks , Mutual Funds Companies , Insurance Companies , Financial Advisors Where Group Self-Directed
  38. 38. Before I Decide: <ul><li>Question for myself: </li></ul><ul><li>My family finance (stable income, low/high income) </li></ul><ul><li>Age of my children (Investment risk should go down as age of your children go up) </li></ul><ul><li>Educational and Career goal (College </li></ul><ul><li>University, Doctor, Lawyer) </li></ul><ul><li>My residential status </li></ul><ul><li>My investment preference </li></ul>
  39. 39. Before I decide: <ul><li>Question for my advisor: </li></ul><ul><li>Enrollment fee and management fee </li></ul><ul><li>Deposit schedule and amount </li></ul><ul><li>Investment options </li></ul><ul><li>Return Rate </li></ul><ul><li>Cancellation penalty </li></ul><ul><li>Withdrawal rules </li></ul>
  40. 40. The RESP vs OSAP Debate
  41. 41. How Much from OSAP? <ul><li>Based on Financial Needs </li></ul><ul><li>How much? </li></ul><ul><ul><li>Financial Need = Allowable Education Costs + Living Costs – Expected Financial Contribution </li></ul></ul><ul><li>Expected Financial Contribution </li></ul><ul><ul><li>Employment Income </li></ul></ul><ul><ul><li>Investment Income </li></ul></ul><ul><ul><li>Scholarship, grants, bursaries </li></ul></ul><ul><ul><li>Income of parents or spouse </li></ul></ul><ul><ul><li>Student’s RESP savings </li></ul></ul>
  42. 42.
  43. 43. Sample case based on online estimator <ul><li>Program: UT Engineer 2010 Sep-2011 April </li></ul><ul><li>Tuition: $10,095 </li></ul><ul><li>Total Cost: $21,729 </li></ul><ul><li>Parents Gross Yearly Income:$40,000 </li></ul>4,525 4,973 Free Money 7,300 7,300 Debt 11,825 12,273 OSAP Funding 10,000 0/1000 RESP Income
  44. 44. Sample case based on online estimator <ul><li>Program: UT Humanity 2010 Sep-2011 April </li></ul><ul><li>Tuition: 5,216 </li></ul><ul><li>Total Cost: 16,641 </li></ul><ul><li>Parents Gross Yearly Income: 40,000 </li></ul>4,054 5,348 Free Money 7,300 7,300 Debt 11,354 12,648 OSAP Funding 5,000 0/1000 RESP Income
  45. 46. Our Website: <ul><ul><li>Official website: </li></ul></ul><ul><ul><li>Please fill out the evaluation form, Thanks! </li></ul></ul>