Contributions must be made to the RESPIn addition to the basic grant described earlier, the Government of Canada provides an additional grant for children from lower-income families.
For example, if you’ve contributed $55,000 to an RESP, the overcontribution of $5,000 will be taxed at $50 per month until it’s removed.While you may only contribute $50,000 per beneficiary to an RESP account, the account balance can grow past this. For example, if you’ve maximized your $50,000 contribution limit and the amount is invested, it can continue to grow to $60,000, $70,000, or more without penalties.
Income earned on the account may be subject to standard income tax once the beneficiary withdraws the amount. Most students are in a low tax bracket, so their income taxes on the RESP withdrawal should be relatively low.Most major banks and many financial institutions offer RESPs. There are no annual contribution limits, so you can contribute as much or little as you want as long as you adhere to your $50,000 lifetime contribution limit.