Savings for Children Education

Allegiance Wealth Management

Funding your children future post-secondary education could be one of the most important priorities as a parent. Since public funding for post-secondary education is shrinking while cost of education is increasing, the responsibility to provide adequate savings for our children education rests on us. However, the good news is there are numbers of savings options to meet this goal.

Registered Education Savings Plan (RESP)

A registered savings program which allows tax sheltered growth with potential eligibility to earn government funding namely the Canadian Education Savings Grant (CESG). When your children are named as beneficiaries on the RESP, income withdrawn from the plan is taxed on their hands, which is usually very low.

Tax Free Savings Account (TFSA)

A registered tax free savings plan as the name itself has described. Each year, you can save up to $5,000 in TFSA. All types of investment income are free from taxation. Assets you have accumulated in the TFSA can be withdrawn without any taxation. There are many planning opportunities to use TFSA as a primary savings vehicle especially during time when your tax rate is low.

In-trust for Savings Account

An investment account which is set up in trust for your children. When deposits are made from Child Tax Benefit, Child Disability Benefit or Universal Child Care Benefits payments, income attribution rules will not apply. This means when income is received by your children, tax is paid by your children. The tax rate applies to your children is generally zero to very low when they don’t have other taxable income.

Tax-exempted Life Insurance

When you accumulate assets within a tax-exempted life insurance policy, such as whole-life participating and universal life insurance contract, gains within the policy are exempted from taxation. This type of life insurance not only provides tax free money in case of death but also allows growth of wealth on a tax efficient manner.

Contact one of our advisors today to help you start a savings plan for your child’s education.