Registered Disability Savings Plans (RDSP) are offered by the Government of Canada for individuals who are receiving the Disability Tax Credit. These tax credits are available to people with ‘severe or prolonged’ mental or physical impairments that markedly impact an individual’s ability to perform basic activities.
The RDSP is a tool to help provide for the long-term financial security of a person accessing the disability tax credit. If the person is a child, then the holder of the RDSP must be a parent or guardian – a responsibility that can continue when the child reaches adulthood if the beneficiary is mentally incompetent. Specific guidelines and timelines around holder responsibilities are available on the Canada Revenue Agency (CRA) website.
Persons opening an RDSP can receive two types of contributions from the government: a grant and/or a bond, depending on the beneficiary’s family income.
Grants are Government of Canada matching contributions made to an RDSP. These matching grants range from 100% to 300%, depending on income. Beneficiaries can receive a maximum of $3500 per year for a lifetime cap of $70,000.
Bonds are available to low-income families without any matching contributions. The government will contribute a maximum of $1000 per year into an RDSP with a lifetime limit of $20,000. Bonds are paid until the year that the beneficiary turns 49 years of age.
If you require information on applying for the Disability Tax Credit or if you are already receiving it and would like to discuss your eligibility for the RDSP, contact Michael Kee for a confidential chat about your personal circumstance.