Qualifying for the Registered Disability Savings Plan

…the second in a series to promote Financial Literacy

The Registered Disability Savings Plan (RDSP)

The Registered Disability Savings Plan is the best savings plan in Canada for people with disabilities.  It has numerous advantages over other government sponsored savings plans, including:

• Up to $70,000 in matching incentives
• Up to $20,000 to assist people with low incomes
• Does not affect people’s provincial BC Disability Benefits (PWD)
• Easy and inexpensive to set up
• Tax savings when RRSPs or RRIFs are rolled over into an RDSP.

Like most good things, the RDSP is not universally available.  To be eligible to open an RDSP, a person must meet the following four criteria:

• Qualify for the Disability Tax Credit – also known as the Disability Amount for tax purposes
• Be under the age of 60 – the RDSP must be opened before December 31st of the year in which the person turns 59
• Be a resident of Canada (currently living in Canada)
• Have a valid Social Insurance Number.

About the Disability Tax Credit (DTC)

• Depending on the province of residence, the DTC will create tax savings from $1,443 to $2,344 for the 2010 tax year.
• There is also an additional amount for children under 18 years of age.
• If a person does not pay any tax, the tax credit can be transferred to an eligible family member who does pay tax, such as a parent or spouse.
• The tax credit and any transfers may be claimed retroactively for the previous 10 years.

Who qualifies for the Disability Tax Credit (DTC)?

1. The DTC is for people of any age who are Canadian residents
2. A person must have a disability, injury or a serious medical condition which restricts or slows him/her from performing the basic activities of daily living.

The Disability Tax Credit is not granted on the basis of having a specific disability. A person might have a physical disability, hearing impairment and in need of hearing aid design, developmental disability, mental illness, learning disability, acquired brain injury or medical condition. A person’s eligibility is dependent on how the condition has impacted his/her life on a daily basis. This may include mental as well as physical restrictions. Feel free to call or email us to discuss your situation.

Applying

To apply for the Disability Tax Credit, a person must submit a two part Canada Revenue Agency form.  The first part is to be filled out by the applicant, while the second part is to be completed by a qualified medical practitioner (medical doctor, optometrist, audiologist, occupational therapist, physiotherapist, psychologist, and a speech-language pathologist, depending on the nature of the disability).

After both sections of the form have been filled out, the form is submitted to CRA for assessment. Following this assessment, CRA’s Disability Unit will determine eligibility.  If an application is denied, the decision may be appealed.

The RDSP Resource Centre can help

The RDSP Resource Centre is able to assist people in qualifying for the Disability Tax Credit.  We have professional knowledge of the tax system and extensive experience in qualifying people, including launching an appeal if an application is denied.

Find out more about how we can help you qualify for the DTC and open your RDSP!

Next Month

• Account holders and Representation Agreements – when legal capacity is a problem