Umm no... You've got it all wrong.ElliottGalt wrote: ↑Oct 31st, 2016 2:41 amNot forgetting it, or its cap($7200 over the lifetime of the child) There is one advantage of RESP and that is the match--assuming you get to keep it.superfresh89 wrote: ↑Oct 27th, 2016 9:35 amLmao.... What?
Are you forgetting the 20% government grant? As well, EAP withdrawals are taxed in the child's name...so no, just no.
RESP is also one of the account types that FIs offer free brokerage accounts for. It's super easy to set up an RESP with some simple ETFs.
Your kid goes to college the money is taxed. If they don't go... you still get taxed, you lose the matched money and 20% of the gains.
TFSA has an advantage in every way except the match. No tax, can be used for anything at any time with no penalty. Don't lose gains either. It is better.
Taxes go up--not down and 7k is nothing in the lifetime of a child. Little reward for a lot of risk--and even if everything works out and the go to school it is still taxed which reduces your total investment.
Only EAP withdrawals are taxed in the child's hands. EAP can consist of government grants and the return on your investment.
When you withdraw what you originally put in, it's called a refund of contributions, which is not taxable.
So, if your kid goes to college, you get back what you put in, tax free, and any grant money and growth can be withdrawn as income in the child's hands. Teens don't usually make enough income to get taxed, so it's basically tax free too.
If your kid doesn't go to college, you still get back what you put in, tax free, and the rest you can put towards another child, or donate it.
Ideally, TFSA and RRSPs should already be maxed out anyways. At a minimum, you should have an RESP and contribute the minimum $2500/yr to get the grant.