The Canada Learning Bond (CLB) is basically free money from the government deposited into an heritage RESP. This makes it easier for you to save up for your child’s future education. The total amount of government deposits can be as much as $2000.
Let’s dig deeper into this topic. Here are some of the most important things to know about Canada Learning Bonds.
1. You need to have an RESP first
You are required to open a registered education savings plan (RESP) before you can apply for a CLB for your child. An RESP is a savings plan made with a financial institution (bank or a credit union, among others).
The money you put into the RESP can grow until it can be spent for your child’s post-secondary education, which include colleges, trade schools, universities, et cetera.
Having an RESP also means your child can qualify for the Canada Education Savings Grant (CESG) and the additional amount of Canada Education Savings.
2. NOT all RESPs Offer CLBs
Not all RESP providers offer CLBs, so make sure your provider does. If, for example, your child is already a beneficiary to an heritage education funds RESP but does not receive any CLB, you should consult with the provider and verify if your child is eligible to receive the incentive.
Once the application is approved, the Canada Learning Bond will be deposited into the RESP every year that the child is considered eligible.
3. Your Adjusted Net Family Income is considered
Your family adjusted net income must meet the criteria set by the government in order to be eligible for CLBs. For the benefit year 2017 to 2018, you’re eligible if:
• You have 1 to 3 children and your adjusted net family income is less than or equal to $45,916
• You have 4 children and your adjusted net family income is less than $51,809
• You have 5 children and your adjusted net family income is less than $57,724
• You have 6 children and your adjusted net family income is less than $63,640
• You have 7 children and your adjusted net family income is less than $69,556
4. CLBs (and other RESP funds) can only be used for Education Programs
RESP funds like CLBs are dedicated for the beneficiary’s educational program in a “qualifying educational institution,” which is a post-secondary education program that lasts at least 3 weeks on at least 10-hour week basis.
This could be any college or university in Canada, as well as any vocational or technical school and apprenticeship program.
5. CLBs Must be Returned if the Childs Stops Studying
If the child chooses not to pursue a post-secondary education and if you choose to close the heritage RESP account, you are required to return the CLBs to the government. Also, remember that:
• You can get back any amount that you have contributed to the RESP if you collapse the account;
• You must return the Canada Education Savings Grant to the Government of Canada; and
• You must return any provincial education savings incentives.