RESPs for year-end
RESPs allow for tax-efficient savings for children’s postsecondary education. The federal government provides a Canada Education Savings Grant (CESG) equal to 20% of the first $2,500 of annual RESP contributions per child or $500 annually. While unused CESG room is carried forward to the year the beneficiary turns 17, there are a couple of situations in which it may be beneficial to make an RESP contribution by December 31.
Each beneficiary who has unused CESG carry-forward room can receive up to $1,000 of CESGs annually, with a $7,200 lifetime limit, up to and including the year in which the beneficiary turns 17. If enhanced catch-up contributions of $5,000 (i.e. $2,500 x 2) are made for just over 7 years, the maximum total CESGs of $7,200 will be obtained. If you have less than 7 years before your child or grandchild turns 17 and you haven’t maximized RESP contributions, consider contributing by December 31
Also, if your child or grandchild turned 15 this year and has never been a beneficiary of an RESP, no CESG can be claimed in future years unless at least $2,000 is contributed to an RESP by the end of the year. Consider making your contribution by December 31st to receive the current year’s CESG and to create CESG eligibility for 2018 and 2019.
Charitable Donations
This is the last chance to use the First-Time Donor’s Super Credit (FDSC). Both the federal and provincial governments offer donations tax credits that, in combination, can result in tax savings of up to 50% of the value of your gift in 2017. Another thing to consider is gifting publicly traded securities, including mutual funds with accrued gains. It gives you a donation credit for the full market value of the security, and eliminates any capital gains that may have accrued with the investment, saving you the capital gain.
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