Take care with RESP withdrawals
　　A registered education savings plan (RESP) lets you save for your child's post-secondary education.
　　You can contribute a maximum of $4,000 annually to an RESP. Of this amount, $2,000 will receive a Canada Education Savings Grant (CESG) from the Federal government, equal to 20 per cent of what you put in. The grant is for a maximum of $400 per year, to a lifetime total of $7,200.
　　When it comes time to take money out of an RESP for your child's post-secondary education, you'll need to first determine how the funds in the plan break down into the two main components. The financial institution holding your plan can help you with this.
　　A large part of the plan will consist of your contributions. You can withdraw these without tax implications. In fact, you can withdraw your contributions at any time during the life of the plan without paying tax. That's because RESP contributions aren't tax-deductible like RRSP contributions.
　　However, if the contributions are not used for a child's education, the subscriber must pay back the grants received from the government on those contributions.
　　The rest of the funds in the plan consist of educational assistance payments. These are made up of the grants received during the life of the plan, plus the plan's accumulated earnings from interest, dividends and capital gains. Note that all withdrawals of grants and investment income are taxed in the student's hands like ordinary income, without the benefit of the dividend tax credit or the 50 per cent exclusion of capital gains.
　　When the student withdraws the plan's earnings and grants, they are taxable to the student, not the contributor. However, students usually have little income and pay little or no tax. The student can use the educational assistance payments or contributions once he or she becomes a full-time student at a qualified post-secondary institution (the funds cannot be used for part-time studies).
　　The student can use the funds for educational expenses such as tuition fees or books, as well as for living and transportation expenses. Students can withdraw a maximum of $5,000 in their first 13 weeks of full-time study. (Note - that the $5,000 limit applies only to the educational assistance payments, not to the subscriber's original contributions).
　　After 13 weeks, the student can withdraw as much as needed to cover qualified educational spending.
　　Finally, you must decide whether to let the student use the contributions to the plan or the income accumulated in the plan to meet expenses.
　　We think you should take out as much of the educational assistance payments as possible each year, subject to the student not having to pay any taxes. That's because the student may get a well-paying summer job in later school years and hence be in a higher tax bracket.