Registered Disability Savings Plan
The Registered Disability Savings Plan (RDSP) is a long-term savings plan to help Canadians with disabilities and their families save for the future. If member has RDSP, he/she may also be eligible for grants and bonds to help with his/her long-term savings.
Under the age of 60 (if member is 59, member must apply before the end of the calendar year in which member turned 59) and if member is eligible for Disability Tax Credit.
A Canadian resident with a Social Insurance Number (SIN)
; and Looking for a long-term savings plan.
Member may contribute any amount to RDSP each year, up to the lifetime contribution limit of $200,000.
If the beneficiary is under the age of majority, holders can be parents, legally authorized representatives, guardians; however, if the beneficiary has reached the age of majority then spouses, common-law partners and beneficiary can also be the holders.
Canada Disability Savings Grant
It is an amount paid based on contributions deposited into a Registered Disability Savings Plan (RDSP).
If the beneficiary’s, 18 years of age or older, annual family income is less than or equal to $89,401, the Government of Canada pays:
300% grant on the first $500 in annual contributions made to an RDSP; and
200% grant on the next $1,000 in annual contributions.
If the beneficiary's annual family income exceeds $89,401, the Government of Canada pays:
100% grant on the first $1,000 in annual contributions made to an RDSP.
Member is eligible for grant if member is 49 years old or under
, a Canadian resident with valid Social Insurance Number and eligible for Disability Tax Credit.
If the beneficiary is under the age of 18, the income of an eligible individual on whom the beneficiary is dependent would be considered.
The maximum grant payable for a beneficiary's lifetime is $70,000;
The maximum grant payable in a year is $3,500 ($10,500 if it includes carry-forward).
Canada Disability Savings Bond
It is an amount of up to $1,000 paid into an RDSP for member with annual income less than or equal to $26,021.
Member with annual income between $26,021 and $44,701 receives a bond based on a legislative formula; Member with annual income more than $44,701receives no bond
No contribution is needed to attract the bond. Grant and bond are available only with Notice of Assessment.
A beneficiary in respect of whom a special allowance under the Children's Special Allowances Act
is to be paid for at least 1 month in the year is eligible for bond and grant. The maximum bond payable for a beneficiary's lifetime is $20,000; the maximum bond payable in a year is $1,000 ($11,000 if it includes carry-forward). Unused grant and bond entitlements will be claimed from the past 10 years (starting from 2008).
The transfer must be for the same beneficiary;
All funds must be transferred;
The prior plan must be closed;
All information must be transferred to the new Issuer; and
The new issuer must continue to pay Disability Assistant Payments (DAP) and Lifetime Disability Assistance Payments (LDAP).
Disability Assistance Payments (DAP) and Lifetime Disability Assistance Payments (LDAP)
DAPs may be made to a beneficiary if allowed under the RDSP's terms;
DAPs may be requested by the holder at any time however limits could apply;
DAPs must be used for the benefit of the beneficiary;
A portion of DAPs and LDAP are taxable to the beneficiary;
LDAPs must begin no later than the end of the year in which the beneficiary turns 60;
LDAPs must be made annually once started.
Assistance Holdback Amount (AHA)
The AHA is the total amount of grant and bond paid in the plan during the previous 10 years that have not been repaid. It must be returned to the Government of Canada when specific events are triggered.
Specified Disability Savings Plan (SDSP)
When a medical doctor certifies that the beneficiary's state of health is such that the beneficiary is not likely to survive more than five years, the holder can:
Choose to convert the RDSP into an SDSP; or
Keep the plan open as an RDSP.
If the RDSP is converted into an SDSP, annual withdrawals of up to $10,000 of the taxable amount or higher amount based on a legislated formula are allowed without having to repay the AHA.If the RDSP stays as an RDSP, there is no limit to the amount withdrawn and the AHA must be repaid if applicable.
Whenever money is withdrawn from an RDSP, all or part of the grants and the bonds that have been in the RDSP for fewer than 10 years must be repaid to the Government. You must repay $3 for every $1 that is taken out, up to the total amount of grants and bonds paid into the RDSP in the last 10 years.
Trigger events leading to the closure of an RDSP include loss of impairment, non-compliance to the Income Tax Act
, death of the beneficiary and RDSP transfer.