Americans have it better
When it comes to saving for a child’s education, Americans are allowed to tax shelter a lot more money than we are.
Under current Canadian law, the maximum you can contribute to a registered education savings plan per child is $44,000, at a rate not to exceed $4,000 a year. There’s no tax deduction but the money grows tax sheltered until withdrawn for educational purposes. At that time, it’s taxed in the hands of the student.
Some U.S. states have government-authorized education savings plans that make ours look cheap. Take the recently launched Florida College Investment Plan, for example. It allows contributions of up to US$283,000 per student (that’s right, about C$450,000, ten times our limit). Investment income compounds tax-free, plus no tax is payable when the money is taken out for qualified college costs like tuition, residence fees, books, etc.