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How are RESPs taxed?

A Registered Education Savings Plan (RESP) offers a secure investment opportunity for your child's education. Choose the best RESP that suits your needs.

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While the money invested in an RESP can grow tax-free, tax has to be paid when the money is withdrawn from the account. 

When an RESP is used for educational purposes, money paid out of the RESP as an EAP withdrawal is taxed in the hands of the student and will likely be taxed at a lower rate as they may have little or no income. 

When an RESP is used for non-educational purposes, you will not be taxed on the amount contributed to the RESP but you will be taxed on the money earned in the plan. This is known as an accumulated income payment (AIP), mentioned above. An AIP will be taxed at your regular income tax level, plus an additional 20% (or 12% for Quebec residents). 

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Watch your child's educational savings grow faster, when you invest your money in an RESP