If you or a family member qualifies for the Federal Disability Tax Credit (DTC), there are numerous benefits to doing so. Contributions to your RDSP, while not tax deductible, will compound on a tax-deferred basis and over time can add significantly to the value of your plan. In addition, your contributions may attract an additional boost with the Canada Disability Savings Grant.

Even if you do not have the financial means to contribute to an RDSP, you may be eligible for the Canada Disability Savings Bond, which will help you build a more secure financial future.

The person who establishes an RDSP is referred to as the account holder, however anyone can contribute to an RDSP provided they have written permission of the account holder. An adult who qualifies for the plan can be both the plan beneficiary and the plan holder.

In case the beneficiary is a minor or is not legally able to enter into a contract, another person will be qualified to become the account holder if that person is:

• a legal parent of the beneficiary (legal parents can both be plan holders

under a plan);

• a guardian, tutor, or curator of the beneficiary or an individual who is

legally authorized to act for the beneficiary; or

• a public department, agency, or institution that is legally authorized to

act for the beneficiary.

In case the beneficiary has reached the age of majority but is not legally able to enter into a contract, the qualified persons who can become the holder are:

• a guardian, tutor, or curator of the beneficiary or an individual who is legally authorized to act for the beneficiary; or

• a public department, agency, or institution that is legally authorized to act for the beneficiary.

The beneficiary can be added as an account holder once they have reached age of majority and are legally allowed to enter into a contract.

The plan holder does not have to be a resident of Canada provided that the beneficiary was a resident of Canada when the plan was opened and contributions were made to the plan. The plan holder can also change during the lifetime of a plan.

Building the Value of an RDSP

There is no annual contribution limit to an RDSP. However, each RDSP has a lifetime contribution limit of $200,000 per plan. All contributions, however, must cease by the end of the year in which the plan beneficiary reaches age 59, or the beneficiary no longer qualifies for the DTC or is no longer a resident of Canada. Contributions must also cease upon the death of the beneficiary.

An RDSP may be eligible for federal incentives called the Canada Disability Savings Grant (CDSG) and the Canada Disability Savings Bond (CDSB).

The maximum lifetime CDSG is $70,000 per RDSP beneficiary and CDSG eligibility ends December 31 in the year in which the plan beneficiary turns age 49.

In addition to the CDSG, the Canada Disability Savings Bond (CDSB) is available to beneficiaries or families with a net family income lower than $37,885. RDSP contributions are not required to be eligible to receive for CDSB.

The maximum lifetime CDSB is $20,000 per RDSP beneficiary and CDSB eligibility ends December 31 in the year in which the plan beneficiary turns age 49.

Growing the Value of RDSP Contributions

RDSP contributions are similar to Registered Education Savings Plans (RESPs) in that the contributions are not tax-deductible. However, the growth on RDSP contributions is tax-deferred while held within the plan. Investments that qualify for an RDSP are generally the same as those for Registered Retirement Savings Plans (RRSPs) and RESPs.