Registered Disability Savings Plans deadline

March 2, 2009 is the application deadline for the 2008 RDSP Grant and Bond. These are very generous programs, so if you qualify, don’t miss the deadline.The Registered Disability Savings Plan (RDSP) is designed to accumulate funds for the benefit of a disabled person. Any Canadian resident under the age of 60 who is eligible for the Disability Tax Credit can establish an RDSP. There is no annual limit on contributions but lifetime contributions cannot exceed $200,000

The RDSPs have some features that are similar to RESPs:
- Contributions are not tax-deductible, so they are not taxable on withdrawal.
- Investment income earned in the plan accumulates tax-free.
- Grants & investment income earned in the plan are taxable on withdrawal.
- The Government of Canada has some programs to help the plan grow.
For RDSPs, these include the CDS Grant and the CDS Bond, and together they could pay as much as $4500 this year into the RDSP depending on family income.

The Canada Disability Savings Grant pays an amount into the RDSP depending on the amount of private contributions to the RDSP and the beneficiary’s family income.
If the income is $75,769* or less, the annual grant is
$3 for every $1 contributed on the first $500.
$2 for every $1 contributed on the next $1000.
So $1500 contributions will result in a grant payment of $3500.
If the income is higher, the grant matches the contributions dollar for dollar up to $1000.

The Canada Disability Savings Bond is paid into an RDSP by the Government of Canada, even if no contributions were made to the plan. If a beneficiary’s family income is $21,287 or less, the DCS Bond will contribute a maximum of $1,000 annually into an RDSP.

To qualify for the CDS Grant or the CDS Bond the beneficiary must open an RDSP, have a Social Insurance Number, be eligible for the Disability Tax Credit, be a Canadian resident, and file taxes.

There is more you will need to know about RDSPs and the CDS Grant and the CDS Bond, so be sure to visit the websites for both the Canada Revenue Agency and the Human Resources and Skills Development Canada:

http://www.cra-arc.gc.ca/gncy/bdgt/2007/rdsp-eng.html

http://www.hrsdc.gc.ca/eng/disability_issues/disability_savings/rdsp.shtml

Currently it seems that the only nationwide financial institution offering the RDSP, grant and bond is the Bank of Montreal. Human Resources and Skills Development Canada is working with other institutions to offer the program, so check their website for updates:

http://www.hrsdc.gc.ca/eng/disability_issues/disability_savings/update_financial.shtml

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