The Registered Disability Savings Plan (RDSP) was first introduced by the Federal Government of Canada on December 1st, 2008 to provide Canadians with disabilities a tax deferred savings vehicle. With the introduction of Disability Savings Bonds and Disability Savings Grants the RDSP offers much more than just tax savings. To say it’s just a tax savings tool would be an understatement.
The Canada Disability Savings Bond:
The Canada Disability Savings Bond provides for Canadians with Disabilities with a low to modest income.
If you qualify and your family net income is below $24,183 you are entitled to the full Disability Savings Bond of $1,000 a year. If your family net income is over $24,183 you can still receive a portion of the Disability Bond as long as your family net income does not exceed $41,544. (These numbers are indexed to inflation and apply to the 2011 tax year)
The great thing about the Disability Savings Bond is that you do not need to make a contribution to the RDSP in order receive the government bond of $1,000! This is great for those who cannot afford to contribute to the RDSP.
The other great thing about the Disability Savings Bond is that you are able to receive $1,000 each year you continue to be eligible, up to a lifetime contribution of $20,000!
The Canada Disability Savings Grant:
If you or someone you know is able to contribute money to the RDSP than it will provide you with considerable savings through Canada Disability Savings Grants.
Every year, the first $500 you contribute to the RDSP the government will provide you with a $1,500 Disability Savings Grant. That’s not a typo, the government will match your contribution three to one, on the first $500 you or someone else contributes to your RDSP.
If you or someone else contributes an additional $1,000 to your RDSP, the government will match your contribution with a Disability Savings Grant of $2,000. Matching your contribution two to one.
The end result is that if you or someone else is able to contribute $1,500 to your RDSP, the government will match it with Disability Savings Grant of $3,500! You can do this every year, up to a lifetime benefit of $70,000.
How do you Qualify for the RDSP?
In order to qualify for the Registered Disability Savings Plan (RDSP) you must first qualify for the Disability Tax Credit. If you’re unsure what the Disability Tax Credit is, I suggest you check out, “What is the Disability Tax Credit?”
Or if you want to find out if you qualify for the RDSP and Disability Tax Credit right away, fill out our Free Disability Tax Credit Assessment form.
I hope this answers your question about ‘What is the Registered Disability Savings Plan (RDSP)? If you have any questions about the RDSP, ask below, or don’t hesitate to contact us.