1. Canada Learning Bond
The Canada Learning Bond (CLB) is a Government of Canada incentive that entitles eligible RESP beneficiaries to a grant (CLB) of up to $2,000. An initial CLB of $500 is provided for the first year of entitlement. Additional annual CLBs in the amount of $100 per year, for 15 years, may be available should the beneficiary meet eligibility requirements.
CLBs are available only to children born on or after January 1, 2004. The beneficiary must be a Canadian resident and qualify each year, by meeting the following requirements:
- The beneficiary must be 15 years of age or younger in that year.
- The beneficiary's parent or primary caregiver is entitled to the National Child Benefit (NCB) supplement for at least one month of the benefit year.
- The beneficiary's public primary caregiver is entitled to receive payments under the Children's Special Allowance Act for a child in care, for at least one month of the benefit year.
- A Social Insurance Number (SIN) exists for the beneficary, subscriber and primary caregiver.
- An Individual or Family Plan (where all beneficiaries are siblings) RESP has been opened on behalf of the beneficiary.
Note: the beneficiary isn't actually entitled to the money. The beneficiary's eligibility means the bond can be deposited to the RESP but it is up to the subscriber to provide instructions for the withdrawal that will result in the bond finding its way into the beneficiary's hands. At no point does the beneficiary have a unilateral right to demand payment of the bond to him or her.
How it works
The CLB is deposited directly into the beneficiary's RESP once the application has been completed by the subscriber and submitted through the RESP provider. To offset any one-time incidental expenses arising from the opening of an RESP account, an additional $25 will be paid into the RESP to which the initial CLB of $500 is deposited. A CLB does not count towards the lifetime RESP and Canada Education Savings Grant (CESG) contribution limits nor will it attract a CESG.
Like other assets within an RESP, CLB monies can grow or earn income on a tax-deferred basis within the RESP. The child will be able to fund his or her post-secondary education by withdrawing educational assistance payments (EAPs) from the RESP. EAP withdrawals will be apportioned between the CLB, the CESG and investment income earned in the RESP.
If the beneficiary doesn't pursue post-secondary education, the CLB is returned to the Government of Canada - unlike the Canada Education Savings Grant, which can be used for a sibling's education.