This is a guest post by Samuel Li, whose information is at the end of this article.
People with prolonged special needs and their family could face a distinct set of financial challenges throughout their lives. To help address these issues, the Government of Canada introduced the Registered Disability Savings Plan (RDSP) back in 2008, where it is designed to support building long-term financial security for disabled persons. The RDSP makes it easier to accumulate savings by providing assisted government benefits and tax-deferred investment growth.
Although there are numerous benefits of having a RDSP, the two key advantages are from the “Canada Disability Savings Grants” and the “Canada Disability Savings Bonds”.
Canada Disability Savings Grants are matching grants that the Government of Canada will put into a beneficiary’s RDSP to assist savings. It could be as much as up to 300% of the deposit, depending on the contribution amount and family net income. For example, according the rule for 2012, for family net income less than or equal to $85414, a $500 contribution will attract $1500 of matching grant. The lifetime benefit per beneficiary is up to $70,000.
For those who do not have the financial resources in contributing toward the RDSP, there is the Canada Disability Savings Bonds. This savings bond is aimed to help out low-income families with disability. Depending on the family net income, the government of Canada may deposit up to $1000 savings bond per year into the RDSP. Unlike the matching grants, no contribution is even required to obtain this savings bond. The total lifetime benefit per beneficiary is up to $20,000.
In terms of eligibility, one must be a Canadian resident under the age of 60 who is already qualified for the Disability Tax Credit (DTC). The DTC is available to individuals who have mental or physical impairments that markedly restrict their ability to perform one or more of the basic activities of living (i.e., speaking, hearing or walking). The impairment must be expected to last a period of one or more years, and a physician must certify the extent of the disability. Individuals can apply to the Canada Revenue Agency (CRA) for the DTC using form T2201. In general, to qualify for an RDSP include, one must:
- Be a resident of Canada
- Be less than 60 years of age
- Have a valid SIN
- Be eligible for the Disability Tax Credit
Throughout my career as a financial consultant, this is one of the most generous programs I’ve ever seen. With up to $90,000 of benefits from the disability savings grants and bonds, it certainly worth considering for disabled families who wish to build a brighter financial future.
Investment Fund Advisor | Investia Financial Services Inc.
Sales Manager & Financial Consultant | Excel Insurance Agency Inc.
80 Acadia Ave., Suite 205, Markham, Ontario. L3R9V1
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