Maria, a single mother, has an RESP for her son, Alex. She consistently contributes $2,500 annually to maximize the Canada Education Savings Grant (CESG). This year, due to unexpected medical expenses, she can only afford to contribute $2,000 to the RESP. What impact will this have on the CESG she receives for Alex this year?

Question: Maria, a single mother, has an RESP for her son, Alex. She consistently contributes $2,500 annually to maximize the Canada Education Savings Grant (CESG). This year, due to unexpected medical expenses, she can only afford to contribute $2,000 to the RESP. What impact will this have on the CESG she receives for Alex this year?

Answer options:

• She will still receive the maximum CESG of $500, as the $2,500 is a guideline. ✅ She will receive $400 in CESG, a reduction from the maximum due to her lower contribution.
• She will not receive any CESG this year, as she did not meet the $2,500 threshold.
• The CESG will be calculated based on her income, not her contribution amount.

Correct answer: She will receive $400 in CESG, a reduction from the maximum due to her lower contribution.

Explanation: The basic CESG is 20% on the first $2,500 contributed annually. With a contribution of $2,000, she will receive 20% of $2,000, which equals $400. This is less than the maximum $500 she would receive by contributing $2,500.