A campaign that we all can support
Have you, a relative, or a friend of yours been diagnosed with a disability? If so, you are not alone. There are around 3.8 million people in Canada having limitations performing daily activities due to a permanent or partial health condition (mental and/or physical). In other words, I call them people with different abilities. 1 in 7 Canadians has at least one disability. And sadly among them, one in four has low income and does not have any support at all.
We, as Canadians, have the privilege to access assistance and financial resources available if requested. In fact, we are the only country in the world that has ever created a tax-deferred savings tool to assist people with disabilities and their loved ones for a better long-term and secured financial future. However, not everyone knows about this wonderful vehicle implemented by the Minister of Finance, Jim Flaherty and endorsed by the federal government on December 1, 2008, called RDSP (Registered Disability Savings Plan). The idea came from the PLAN, (Planned Lifetime Advocacy Network), a community of families and people with disabilities supporting each other to build a better life.
The government has the monetary resources to deliver to all eligible applicants. Just ask for it if you experience any physiological or mental health concerns, such as: anxiety, depression, personality disorder, schizophrenia, paranoia, retardation and psychotic disorder; difficulty seeing, talking, hearing (even with aid devices); trouble at walking or moving due to impairment or chronic pain; hard time learning, remembering or concentrating.
If you (or anyone you know) have any of the previous conditions that inhibit or prevents you from performing basic daily tasks, you could qualify for a Disability Tax Credit (DTC) that enables opening an RDSP for a Canadian resident who is not older than 49 years old with a valid SIN. Filling the DTC form T2201 is the first step. The second step is answering ‘yes’ to each of the following two questions:
- Do you have a mental or physical disability that is expected to last, or has lasted, one year or more?
- Does at least one of the following statements apply to you?
- You are blind.
- You need extensive therapy or treatment.
- You are limited in activities that people need to do regularly (for example: speaking, hearing, walking, using the bathroom, eating, getting dressed, remembering, banking, finding your way around, dealing with emergencies.)
The third is the statement by a physician or specialist. There are few pages that must be completed and signed by the Doctor. The fourth is to submit the DTC; the fifth is getting its approval and the funds.
As you see, there are plenty of positive things in your favour. So, just find an authorized financial professional to start the process of opening the RDSP (this includes the DTC application). For now, I will share with you the 10 most valuable features of an RDSP.
The 10 most valuable features of an RDSP
- Anyone can open the account, which is called the plan holder (not necessarily a Canadian resident/citizen). The holder will act on behalf of the beneficiary if she/he is a minor as well as an adult that doesn’t have the legal capacity to manage their own financial affairs.
- A beneficiary older than 18 years old must be the plan holder if she/he has the capacity to manage and take decisions on their personal and financial activities. However, her/his parents could be joint holders if they want.
- Only one RDSP account per beneficiary. And just one beneficiary per plan. Although, a beneficiary can have as many account holders as she/he wants.
- Contributions could be done by anyone regardless of where they are and until the year in which the beneficiary turns 59 years. Please note that grants and bonds will stop once beneficiary turns 49 years old.
- Annual savings are unlimited. However, the government grants only match contributions to a maximum of $1,500 per year. $200,000 can be contributed throughout and until the beneficiary turns 60. In addition, you might receive up to $90,000 in government contributions if you qualify for it.
- Beneficiaries of an RDSP can participate in other financial aid programs without affecting income assistance benefits. It does not get clawed back, nor does it reduce disability social security payments at all.
- Families and individuals with low income have the privilege to have the government save for them through the CDSB, Canada Disability Saving Bonds, $1,000 a year (up to $20,000) if the household income is less than $30,000. If the income is between $30,000 to $45,916, just a portion of the $1,000 is received. For incomes greater than that, no CDSB is payable.
- The government will pay a 300 percent CDSG, Canada Disability Saving Grants, on the first $500 annual contributions and 200 percent CDSG on the next $1,000 if the total household is lower than $91,831. If it is greater, 100% only will be paid on the first $1,000.
- There are no rules or limitations on how to use all the money saved. Just keep in mind to apply the 10 years rule. There is a “holdback period” of 10 years from the year of the last grant and bond payment. In case of an early withdrawal, penalties and deductions might be applied.
- All the transactions, including deposits, the Canada Disability Savings Grants and Bonds earnings on the investment and the proceeds are included in the beneficiary’s income for tax purposes when they are paid out of the RDSP. Remember, contributions are not tax-deductible, but the growth is tax-deferred. Note, parents and caregivers can claim the DTC on their income tax form if named as the RDSP holder.
Just a small amount of individuals across Canada had set up the RDSP. There is still a huge number of people with disabilities that are not taking advantage of this wonderful monetary tool. Please be aware that by having this unique savings plan, you will triple and double every dollar invested, including the federal contributions. Plus it will compound its value as it has the best return on investment available. Take advantage, and do whatever you want with the capital accumulated. For instance, you can use it for the downpayment of a property, home improvements, post-secondary education, getaways, self-care, automobile, and etc.
Money is there for you. Just start the process for yourself or spread the news to all as someone must be looking for this opportunity.
Need support? I can guide you if:
- You are unclear about your eligibility.
- You don’t know how to apply for DTC
- You are not sure which health practitioner can fill the medical questionnaire
- Your claim has been denied or been asked to review and re-apply
Complete the RDSP Awareness Survey for a Chance to Win!
We want to better understand your needs and by completing this awareness survey you will get a chance to win 1 of 8 Amazon.ca gift cards and a complimentary review of your RDSP portfolio.
Contest closes Thursday, May 31 at 11:59 PM EST. Winners will be notified by email or phone within two weeks of the contest completion.