The Registered Disability Savings Plan (RDSP) is a unique and powerful tool designed by the Government of Canada to help individuals with disabilities save for their long-term future. Accessing this plan begins with one mandatory step: qualifying for the Disability Tax Credit.

The Foundation: The Disability Tax Credit (DTC)

The Disability Tax Credit (DTC) is the essential first step and the official federal certification required to open an RDSP. The DTC is a non-refundable tax credit that helps individuals with disabilities, or their supporting family members, reduce the amount of income tax they may have to pay, offsetting some of the related financial burden.

To be eligible for the DTC, a medical practitioner must certify that the individual has a:

1. Severe and Prolonged Impairment that significantly restricts a basic activity of daily living, or requires life-sustaining therapy.
2. Continuous Period of at least 12 months where the impairment is expected to last.
3. Marked Restriction meaning the individual is unable to perform a basic activity, or it takes them significantly longer than usual, all or almost all of the time.

DTC approval provides immediate financial benefits and acts as the gatekeeper for other programs:

1. Tax Relief - The credit reduces the amount of income tax owed by the beneficiary.
2. Transferability - Any unused amount of the credit can be transferred to an eligible supporting family member, such as a spouse, parent, or common law partner.
3. Retroactive Claims - You can request that the Canada Revenue Agency (CRA) adjust your tax returns for previous years, potentially for up to 10 years, if you were eligible for the credit during that time.
4. Program Access - Approval is the mandatory qualification to open a Registered Disability Savings Plan (RDSP).

The Wealth Builder: Registered Disability Savings Plan (RDSP)

The RDSP is a tax advantaged, long-term savings plan for Canadians approved for the DTC. Contributions made to the plan are not tax deductible, but they, along with the investment income and government assistance, grow on a tax deferred basis until the funds are withdrawn.

The Government of Canada helps boost savings through two main incentives, with a combined lifetime maximum of $90,000 in government funds paid directly into the plan:

Government grants and bonds can be paid into the RDSP up until the end of the year the beneficiary turns 49.

The amount of grant and bond received depends on the beneficiary's adjusted family net income and the contributions made:

• The CDSB is available to low- and modest-income Canadians and is paid into the RDSP even if no private contributions are made to the plan.
• The RDSP has a lifetime contribution limit of $200,000.

To be designated as a beneficiary of an RDSP, an individual must meet all of the following criteria:

1. Be approved for the Disability Tax Credit (DTC).
2. Have a valid Social Insurance Number (SIN).
3. Be a resident of Canada when the plan is opened.
4. Be under the age of 60 (a plan must be opened before the end of the year the beneficiary turns 59).

Despite the enormous benefits, as of the most recently published data in December 2023, the national RDSP take up rate was approximately 34.9%, leaving billions of dollars in government assistance unclaimed by eligible Canadians.

The Frost Group at Raymond James specializes in simplifying this process, ensuring you access every dollar you are entitled to. We offer personalized support to help you:

1. Navigate the DTC application process and work with your medical professional.
2. Set up your RDSP to ensure you receive the maximum annual grants and bonds available.
3. Develop a long-term financial strategy centered on your RDSP to secure your future.

Download your complimentary RDSP Guide today and take the first step toward a stronger, more confident financial future for yourself or your loved one.

RDSP GUIDE