WEALTH Matters — SUMMER 2010

You may be surprised to know that over 11% of Canadians aged 15 – 64 live with a disability. This can make it difficult to find work or earn enough to both live and save for retirement. Parents of a disabled child may worry about their child’s financial security, especially when the child is older and the parents are no longer able to provide support.

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The disabled beneficiary must meet a number of conditions: they must be under age 60, Canadian Resident with a Social Insurance Number, and eligible for the ‘disability amount’. A person is eligible for the disability amount only if a qualified practitioner certifies on Form T2201, Disability Tax Credit Certificate, that the individual has a severe and prolonged impairment. The form must also be approved by CRA before the individual is eligible for the disability amount. Only then can an RDSP be opened for the individual.


Grants are a maximum of $3500 per year if contributions are made to the RDSP. The grant is up to 300% of the money contributed when the income of the beneficiary (and his or her parents if still a minor) is under $78,000. If the income is higher, there is still a 100% grant of the first $1000 per year contributed. The ‘bond’ amount is not really a bond, just a $1000 annual grant made to the RDSP even if none of your own money is contributed. This is only available to low income beneficiaries and begins to decrease when their income is over $22,000. These amounts are shown in the table below.

The Registered Disability Savings Plan (RDSP) was enabled by legislation in 2007, which aims to assist disabled individuals and their families by providing up to $70,000 in grants to investors, and an additional maximum $20,000 in bonds to be invested to fund retirement income for disabled individuals. The ‘bonds’ are actually grants that don’t require the investor to contribute their own money. The RDSP also allows tax-sheltered growth like an RRSP.


Unfortunately, the rules are complex, and you need to be careful to ensure that you maximize the benefits available with the RDSP, and don’t lose those benefits later.

disabled canadians can receive $90,000 in Grants

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INterest rate UPDATE

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The key is to start contributions early, but save some contribution room for years in which the grant amounts can be maximized. Also, the RDSP is aimed at providing retirement income, so don’t expect to get the money out before that: if you start drawing income too soon, you will have to repay all grants received in the 10 years prior to starting income withdrawals.


If it sounds confusing, it is! Fortunately, we can help. We have a financial planning model which can help determine the optimal contribution plan to maximize the available benefits. If you are disabled, or have a family member who is, please call us!

Disabled Canadians can receive $90,000 in grants and bonds

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Benefit [Income Limit]

Benefit (Any Income)


First $   500.00

$1,500.00 (300%) [under $78.000]

$   500.00 (100%)


Next $   500.00

$1,000.00 (200%) [under $78.000]

$   500.00 (100%)


Next $1,000.00

$1,000.00 (100%) [under $78.000]

$       0.00


         $       0.00

$1,000.00              [under $22.000]

$       0.00