Quick Comparison
| Feature |
RESP |
RRSP |
| Government grants |
✅ 20-40% CESG |
❌ None |
| Tax deduction |
❌ No |
✅ Yes |
| Tax-free growth |
✅ Yes |
✅ Yes |
| Withdrawal flexibility |
Education only |
LLP for education |
| Contribution limit |
$50,000 lifetime |
18% of income |
| Best for |
Child’s education |
Your education/retirement |
RESP Advantages
Government Grants
| Grant |
Amount |
Maximum |
| CESG (basic) |
20% of contribution |
$500/year |
| CESG (enhanced) |
Extra 10-20% |
Low income |
| CLB |
$500-$2,000 |
Low income families |
| Provincial grants |
Varies |
BC, Quebec |
Lifetime Grant Potential
| Scenario |
Annual Contribution |
CESG |
Over 18 Years |
| Maximum grant |
$2,500 |
$500 |
$7,200 |
| Partial |
$1,000 |
$200 |
$3,600 |
| With catch-up |
$5,000 |
$1,000 |
Varies |
RESP Tax Treatment
| Stage |
Tax |
| Contribution |
After-tax (no deduction) |
| Growth |
Tax-deferred |
| Withdrawal (EAP) |
Taxed in student’s hands |
| Student’s tax |
Usually very low |
RRSP Advantages
Tax Deduction Value
| Income |
Tax Bracket |
$5,000 Deduction Saves |
| $50,000 |
~29% |
$1,450 |
| $75,000 |
~32% |
$1,600 |
| $100,000 |
~37% |
$1,850 |
| $150,000 |
~43% |
$2,150 |
Lifelong Learning Plan (LLP)
| Feature |
Details |
| Maximum withdrawal |
$10,000/year |
| Total limit |
$20,000 |
| Repayment |
10 years |
| Who can use |
You or spouse, not child |
| For child’s education |
❌ Not applicable |
Side-by-Side Analysis
$2,500/Year for 18 Years
| Factor |
RESP |
RRSP |
| Total contributed |
$45,000 |
$45,000 |
| Government grants |
$7,200 |
$0 |
| Tax savings (30% rate) |
$0 |
$13,500 |
| Assumed growth (5%) |
~$35,000 |
~$30,000 |
| Total at 18 |
~$87,200 |
~$75,000 |
RESP wins due to guaranteed 20% grants.
Tax on Withdrawals
| Account |
Withdrawal Tax |
| RESP (EAP) |
Student’s rate (often 0-15%) |
| RRSP |
Your rate (often 30-45%) |
When RRSP Makes Sense
| Situation |
Why RRSP |
| Already maxed RESP |
$50K lifetime limit reached |
| Uncertain if child attends |
RRSP more flexible |
| High income now, low later |
Tax arbitrage |
| Need retirement savings |
Dual purpose |
| No children yet |
Can pivot later |
When RESP Is Better
| Situation |
Why RESP |
| Child likely to attend PSE |
Grants are free money |
| Under $50K contributed |
Room for grants |
| Lower income |
Extra CESG + CLB |
| Want education-specific |
Clear purpose |
Optimal Strategy
The Best Approach
| Priority |
Action |
| 1 |
Contribute $2,500/year to RESP (max CESG) |
| 2 |
Get employer RRSP match if available |
| 3 |
Max TFSA for flexibility |
| 4 |
Additional RRSP if high income |
| 5 |
Extra RESP if needed |
By Family Income
| Family Income |
Strategy |
| Under $60K |
RESP first (enhanced CESG + CLB) |
| $60K-$150K |
RESP $2,500, then RRSP |
| Over $150K |
Both accounts, prioritize RESP grants |
What If Child Doesn’t Attend?
RESP Options
| Option |
How It Works |
| Wait |
Child has until 35 |
| Transfer to sibling |
Keep grants |
| Transfer to RRSP |
Up to $50K (need room) |
| Withdraw AIP |
Tax + 20% penalty |
| Collapse |
Get contributions back |
RRSP Options
| Option |
How It Works |
| Keep for retirement |
Original purpose |
| Withdraw for education |
Fully taxable |
| Use LLP |
Only for your education |
Family RESP Strategy
Multiple Children
| Approach |
Benefit |
| Family RESP |
One account, flexible allocation |
| Individual RESPs |
Separate tracking, transfer limits |
Grant Catch-Up
| Rule |
Details |
| Carry forward |
Unused CESG room accumulates |
| Max catch-up |
$5,000/year (gets $1,000 CESG) |
| Until age 17 |
Must have had RESP before 16 |
Tax Efficiency Comparison
Total Tax Benefit Over 18 Years
| Account |
Contribution |
Grant/Deduction |
Growth Tax |
Withdrawal Tax |
Net Benefit |
| RESP |
$45,000 |
+$7,200 grant |
$0 |
Low (student) |
Best |
| RRSP |
$45,000 |
$13,500 refund |
$0 |
High (your rate) |
Good |