BC Training & Education Savings Grant
In last week’s article, I wrote a summary of the changes from the 2013 federal budget that may impact your finances. The recent British Columbia budget also held many changes and there is one in particular that I want to help explain today. The new “BC Training & Education Savings Grant” is a wonderful new program that every qualifying child should take advantage of. It provides a one time, $1,200 grant that requires no matching or additional contributions on your part!
The government has been running quite a few television and print ads announcing this new grant but the general public still seems a little confused as to who actually qualifies for this program. I’ll see if I can help to simplify this for you.
There are three basic criteria that must be met in order to receive this $1,200:
1) Only children born after January 1st 2007 will qualify for this grant. Any child born before this date is unfortunately out of luck.
2) The child must have a Registered Education Savings Plan (RESP) open before they turn 7.
3) The child must also be a resident of British Columbia.
Once an RESP has been opened, or if it is already in place, families will automatically receive a notice from the BC government once the child turns 6. You cannot receive this grant before the child’s 6th birthday. When the child does turn 6, the family can apply for the grant through their financial advisor who maintains their RESP. The purpose of this “application” is simply to confirm that the child is a resident of BC at this time.
If the child is already 6 (but not yet 7) when this RESP is created, the grant application will occur at the same time as the RESP application.
Once this new program is fully implemented, families can expect to see the $1,200 transferred into their RESP accounts shortly after the application is received. For the time being however, this process will take anywhere from 12-24 months while the province works with the Government of Canada to make the systems changes necessary to transfer the money. The RESP accounts however, must be set up right away.
If your child is born after Jan 1st, 2007 and does not yet have an RESP, the time to act is now. If you have a child that is born sometime in 2007, the urgency is even more critical. Once the child reaches their 7th birthday, it will be too late to take advantage of this offer. For those children born in January or February of 2007, the deadline has been extended until February 28th of 2014.
In addition to this new grant, your RESP account will continue to receive the “Canadian Education Savings Grant” and potentially the “Canada Learning Bond” depending on your family’s income bracket. Additionally, the invested amounts will be able to grow tax deferred and when pulled out for education, be taxed in the child’s name (who may not pay any tax at all depending on their income level). When these various grants and benefits are combined, the RESP proves to be a great vehicle to help save for your child’s education.
An RESP can be opened at any financial institution with practically any licensed advisor in Canada. The investments chosen inside of the RESP are not limited to a few options but instead should be carefully considered in the same manner as your own RRSP account. Make sure you choose a financial advisor that you trust to help you navigate the investment options in your RESP to make the most of this new government grant.