Which statement best describes the CESG and RESP interaction?

• A. CESG provides a loan to parents to fund RESP contributions.
• B. CESG offers a 10% match on contributions up to $1,000 per year.
• C. CESG matches 20% of eligible contributions up to $2,500 per year per beneficiary, up to a lifetime maximum of $7,200.
• D. CESG is a tax deduction from RESP contributions.

Answer: (C)

CESG is a government top-up to an RESP, not a loan and not a tax deduction. It adds money to the plan based on your contributions. The match is 20% of eligible contributions, up to $2,500 per beneficiary each year. So contributing the full $2,500 yields $500 in CESG for that year; contributing less reduces the grant proportionally. The total amount the CESG can provide to a single beneficiary over the life of the plan is capped at $7,200, which means reaching about $36,000 in eligible contributions would maximize the grant. The money, including the CESG, grows tax-deferred inside the RESP and is withdrawn later to pay for education expenses.