| 1.
Contribution Limit |
| In-Trust
Account |
RESP |
Most
Beneficial |
| No
Limit
|
$4,000/yr.
Beneficiary, with a lifetime maximum of $42,000 per beneficiary. |
In-Trust |
| 2.
Ability of the beneficiary to use the money for various purposes. |
| In-Trust
Account |
RESP |
Most
Beneficial |
| Once
minor children reach the age of majority, they may do with the
assets as they please. |
The
beneficiary may only receive the assets while enrolled at a
qualifying post secondary school. |
In-Trust |
|
3. Consequences of the money is not used for the intended purpose |
| In-Trust
Account |
RESP |
Most
Beneficial |
| No tax consequences
|
The subscriber (e.g., parent) could
forfeit income and gains earned on the contributions. In certain
cirdcumstances, up to 450,000 in accrued income and gains on
plans in existence for at least 10 years, and where all beneficiaries
have reached age 21, may rolled into the subscribers RRSP providing
there is contribution room. Or, earnings can be taxed in the
hands of the subscribers along with a 20% penalty. |
In-Trust |
| 4.
Ability to regain original capital |
| In-Trust
Account |
RESP |
Most
Beneficial |
| The contributor has no right to receive any
funds held in the account because they belong entirely to the
child beneficiary. |
The subscriber (e.g., parent may
receive a tax free return of capital at any time. However, this
could trigger a repayment of the government grant. |
RESP |
| 5.
Control over assets |
| In-Trust
Account |
RESP |
Most
Beneficial |
| The trustee of the account decides how to invest
the funds. However, all assets in the account belong to the
named beneficiary. |
The subscriber (e.g., parent) controls
the investments and decides when to pay the money to the beneficiary.
|
RESP |
| 6.
Government assistance |
| In-Trust
Account |
RESP |
Most
Beneficial |
| None
|
A grant is available on the first
$2,000 of contributions if certain conditions are met, capped
at $400 annually per child to a lifetime maximum of $7,200. |
RESP |
| 7.
Investment Options |
| In-Trust
Account |
RESP |
Most
Beneficial |
| No restrictions, although investments that
generate income, like dividends and interest, are taxed in the
hands of the contributor, not the child. Provincial trustee
legislation must also be considered. |
No restrictions although some
financial institutions offer only certain types of investments.
|
RESP |
| 8.
Taxation of income and capital gains |
| In-Trust
Account |
RESP |
Most
Beneficial |
| Capital gains are taxed in the hands of the
child if the account is set up properly. All other forms of
income other than secondary icome are taxed in the hands of
the contributor until the child reaches the age of majority.
|
No taxes are payable on income
and gains until accumulated earnings are withdrawn. At withdrawal,
the accrued income is taxed in the hands of the student/beneficiary. |
RESP |
| 9. Tax
filings |
| In-Trust
Account |
RESP |
Most
Beneficial |
| The child should generally file a tax return
to report capital gains each year. A trust tax return is also
technically required. |
No annual filings are required
until the student starts making withdrawal. Thereafter, students
must report the withdrawals on their tax returns. |
RESP |
|
