Education Savings
by Gardy Frost
The Universal
Child Care Benefit (UCCB) is now in effect. Beginning July 20, 2006
eligible families may be receiving this benefit. So, What should
we do with it?
Are you receiving
yours? Are you eligible?
The UCCB provides
families with a $100 monthly payment (up to $1,200 annually) for
each child under six years of age. It will be paid separately from
the Canada Child Tax Benefit (CCTB) and is taxable.
A simple illustration
shows investing $100 at the beginning of each month for 6 years,
assuming 7% interest will provide a lump sum amount of $8,916.09*
at the end of the 6 years.
Put another
way, the government is adding more for your Child’s future.
Please call us today to set up an appointment to see how this fits
with your financial planning.
*Subject
to tax.
Are you maximizing
Government Education Dollars for 2006?
In addition to the latest government dollars available for young
families, the end of the year is approaching and it is a good time
to top up your RESP contribution. This allows you to maximize the
Canada Education Savings Grant (CESG) available. The CESG, which
is deposited directly into the RESP itself, is equal to 20% of the
annual contribution made to an RESP, to a maximum of $400 per year
per beneficiary. The CESG is not included in determining the annual
$4,000 or lifetime $42,000 RESP contribution limits.
If you have
not already started an RESP you can do so and collect any available
CESG carryforward to get caught up. Starting in 1998, every qualifying
child under the age of 18 began to accumulate CESG eligibility.
CESG eligibility is used to determine the maximum amount of CESG
that a plan can receive from the government in a year. CESG payments
are based on a maximum of 20% of contributions actually made in
the year, or $2,000 ($2,000 is the maximum amount of contributions
per year which can receive a grant), whichever is less. Unused CESG
eligibility is automatically carried forward from year to year,
however, since the maximum annual RESP contribution remains at $4,000,
the maximum CESG for any one year is $800.
Be certain to
maximize ALL of the Canadian Government grant dollars before 2007
and get a head start on your children’s savings.
To learn more
about the available Government benefits please click on the following
CRA links:
Child
and Family Benefits
Benefit
Calculator from CRA
Universal
Child Care Benefit
CESG
The
National Child Benefit
Provincial
Programs
BC
Family Bonus
CRA
website: Canada Benefits
BC
Parent Benefits
This article
is solely the work of Arbutus Financial for the private information
of our clients. Although we are registered Mutual Fund Representatives
with Dundee Private Investors Inc. (“Dundee Private Investors”),
this is not an official publication of Dundee Private Investors.
The views (including any recommendations) expressed in this newsletter
are those of the author alone, and they have not been approved by,
and are not necessarily those of, Dundee Private Investors |