Fair Advice Financial Inc.

Maximize Your RESP Before Year-End! 🚀

Not only has the cost of college and university risen sharply, but so has the importance of graduating with a marketable skill and knowledge set, which increases the necessity of a post-secondary education. The cost of tuition, books, supplies, residence, and travel for a student in an undergraduate program at a Canadian public university is approximately $25,000 per year.

Although more in-depth analysis is usually required, the quick RESP facts are:
• The Canada Education Savings Grant (CESG) will match 20% of RESP contributions up to a maximum of $500 per year per beneficiary and to a lifetime maximum of $7200 per beneficiary
• There are no minimum or maximum annual RESP contribution, but each beneficiary has a $50,000 lifetime contribution limit
• Contributions grow and compound tax-free, like an RRSP, until they are withdrawn
• The original contributions are treated as return-of-capital and are not taxed since these contributions did not reduce taxable income
• Only the grants and earnings withdrawn as Education Assistance Payments (EAP), are taxed
• EAPs are taxed in the hands of the beneficiary (i.e., the student), and typically at a much lower tax rate or no tax, if the beneficiary’s income is low enough
• Returned capital and EAPs can be used for education-related expenses, including housing and transportation, when enrolled at any eligible domestic or foreign post-secondary institution or training program
• A child can be the “beneficiary” on more than one RESP
• RESPs are typically opened for children by parents, grandparents, aunts, and uncles

Passing wealth between generations to minimize student debt by opening and funding a RESP on behalf of your grandchildren is an excellent option.
The opportunity to set aside a useful inheritance directly to your grandchildren for the expressed purpose of education is extremely appealing for many.

The end of the year is quickly approaching, and it’s the perfect time to review your Registered Education Savings Plan (RESP)!

🚨 FHSA vs RRSP: Which is Right for You? 🚨

Thinking about saving for the future? Both the First Home Savings Account (FHSA) and Registered Retirement Savings Plan (RRSP) offer great benefits, but each is designed for different goals:

🏠 FHSA: Save up to $40,000 tax-free for your first home! Contributions are tax-deductible, and withdrawals for a home purchase are also tax-free.

💼 RRSP: Save for retirement with tax-deferred growth. Contributions reduce your taxable income, and you only pay taxes when you withdraw in retirement (hopefully at a lower tax rate!).

Key differences:

- FHSA is specifically for first-time home buyers.
- RRSP is focused on retirement savings.
Maximize your savings by using both! 💡

Note: The deadline for 2024 FHSA contributions is December 31, 2024, and for RRSP contributions is March 1, 2025

Call us today for more information at (905) 451-7900; [email protected] or to learn more, please visit www.fairadvicefinancial.com

Fair Advice Financial Inc. Offering unbiased financial advice tailored to your unique needs, with a focus on your carefully considered goals and long-term objectives. We’re here to help you make informed, confident decisions about your financial future.

https://www.fairadvicefinancial.com/index.php/blog-categories/blog-home-buyer-plan/37-bome-buyer-s-plan-basics

Home Buyer's Plan- Basics Executive Summary A couple who have begun to save for their retirement can access up to $70,000 from their RRSPs to buy or build their first home. The

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