Registered Disability Savings Plan provider user guide - Grant and Bond

1.1. How it works

The payment of the grant is based on the following requirements.

• An RDSP : A qualified holder must open an RDSP for an eligible beneficiary.
• RDSP Contributions: The holder makes and authorizes eligible contributions to the RDSP.
• Eligibility Criteria: The holder and RDSP provider must ensure that all eligibility criteria for the grant have been met. Otherwise the grant will not be paid.
• Application Process: The holder submits the completed application form to the financial institution who transmits the request through an automated system to ESDC.

2.1. Grant Annual Matching Rates

The Canada Disability Savings Act (CDSA) sets out the amount of grant that may be paid into an RDSP.

Depending on the beneficiary’s family income and the amount contributed in the year, the Government of Canada will contribute grants of 300%, 200%, or 100%.

The Canada Revenue Agency (CRA) indexes the income thresholds annually. Income threshold amounts are used to determine the grant amount a beneficiary could receive each year. Generally speaking, January is used to set the grant matching rate for all contributions made in a given year. The amount of matching grant paid is determined as follows:

2.2. Family Income

Family income is validated with information held by CRA based on filed income tax returns.

The income data of the second preceding tax year is used to establish the grant match rate given CRA will not have finished processing the immediately preceding year’s tax data until the second half of the year. The only assessed income data available will be of the second preceding taxation year. For example, the tax data used in January 2012 will be from 2010. It is also important to note that the determination of a beneficiary’s family income will differ, depending on his or her age.

The holder should ensure the beneficiary’s family income information is on file at CRA in order to maximize grant payments. The grant matching rate at 300% or 200% can only be determined once the family income is verified.

2.3. Grant Payments and Income Thresholds

2.4. Shared Custody

Since July 2011, divorced or separated parents who share the custody of a child or children are able to receive and share CCB and credits for those children throughout the year.

As a result, there could be two different income levels used for a beneficiary under the age of 18 (one for each primary caregiver) during the calendar year. The Canada Disability Savings Program (CDSP) system will use the income level that is the most advantageous for the beneficiary to determine the grant entitlements.

2.5. Beneficiary's Residency

A beneficiary who moves out of Canada may not be considered a Canadian resident for the time they are out of the country. In this case, the holder will not be eligible to make contributions in the years the beneficiary did not meet residency requirements.

CRA is responsible for determining residency status for a particular year. Information on the primary caregiver is used to determine residency of a beneficiary under the age of 18.

It is the holder’s responsibility to inform the financial institution of any changes in the beneficiary’s residency status.

If the beneficiary’s parents are with a diplomatic mission or in the Canadian Forces, the family members are still considered to be Canadian residents. The children are, therefore, eligible for the grant.

2.6. The CCB

For a beneficiary who has not yet reached the age of majority (and for beneficiaries celebrating their 18^th birthday in a calendar year), ESDC validates the beneficiary’s information against the Canada Revenue Agency’s CCB database. This includes verifying that the primary caregiver has applied for the CCB at the time they filed their last tax return.

The CCB is a tax-free monthly payment made to eligible families to help them with the cost of raising children under the age of 18. The CCB may include the Child Disability Benefit (CDB), a monthly benefit for families who care for a child who is eligible for the Disability Tax Credit (DTC).

2.7. Beneficiary Under Care

If a beneficiary under the age of majority (including beneficiaries celebrating their 18^th birthday in a calendar year) is under the care of a department, agency, or institution which is eligible for payments under the Children’s Special Allowances Act (CSAA) for at least one month in the calendar year, the grant entitlement for that year will be at the highest matching rate of 300% on the first $500 and 200% on the next $1,000.

A payment made under the CSAA is tax-free monthly payment, made to an organization for a child who is under the age of 18 and under their care. These payments may include the CDB, a monthly benefit for organizations who care for a child who is eligible for the DTC.

2.8. Consent from Primary Caregivers

Beneficiaries who are over the age of 18 when they open an RDSP will need to obtain the consent from primary caregivers in order to obtain the data used to determine DTC eligibility, Canadian residency and family income for when they were 18 years of age and under.

For example, a 21 year old beneficiary who opens an RDSP may be able to access unused grant entitlements from previous years if he or she obtains the consent from the primary caregiver for each of those years, thus making it possible to verify DTC eligibility, Canadian residency and family income for the previous 10 years.

In order for ESDC to pay grants, primary caregivers must consent to the sharing of their personal information between ESDC, CRA, and the financial institution for the administration (which may include policy analysis, research and evaluation) of the CDSA, the Canada Disability Savings Regulations and the Income Tax Act.

If there are different primary caregivers (or organizations), ESDC will use the primary caregiver(s) information that is most beneficial for the beneficiary.

3.1. Accessing Grant Entitlements

The carry forward provision of grant entitlements came into effect on January 1, 2011, with payments beginning in 2012. Grants are generally paid at the end of the month following the month in which an eligible contribution is made.

The beneficiary cannot access unused grant entitlements after December 31 of the year they turn 49 given an eligible contribution must be made in order to access this unused grant entitlement. No eligible contribution can be made after December 31 of the year the beneficiary turns 49.

3.2. Grant and Carry Forward Calculations

The maximum lifetime grant limit is $70,000 per beneficiary.

Once a beneficiary has received the maximum lifetime grant limit, contributions will no longer be eligible to receive grant. By qualifying for and receiving the 300% and 200% grant matching rates, a beneficiary will reach the lifetime grant limit of $70,000 sooner with fewer and smaller contributions.

The maximum annual amount of grant entitlement that can be carried forward and paid into an RDSP is $10,500. This amount includes any grant entitlement for the current year.

1.0. The Bond - An Overview

No RDSP contributions are required to receive the bond. The Government of Canada pays the bond into the beneficiary’s RDSP.

Depending on his/her family income, a beneficiary may be eligible to receive up to $1,000 annually in bond, with a lifetime limit of $20,000.

The bond may be paid into an RDSP providing the holder applies for the bond on or before December 31 of the calendar year in which the beneficiary turns 49 years of age.

2.0. Bond Eligibility

3.0. Bond Limits and Carry Forward

The carry forward provision allows individuals to access unused bond entitlements from the past 10 years, starting from 2008 (the year the RDSP became available). This applies to all RDSPs, regardless of when the plan is registered.

The entitlements do not accrue during any period a beneficiary is not eligible for the DTC or not a resident of Canada.

The annual bond entitlement is based on the beneficiary’s family income; by qualifying for and receiving the annual maximum bond payment of $1,000 each year, a beneficiary will reach the lifetime bond limit within twenty years. A beneficiary has the potential of receiving annual bond payments up to the calendar year in which they turn 49 years old but must apply for the bond on or before December 31 of the year that they turn 49.

The maximum annual amount of unused bond that can be carried forward and paid into an RDSP in a calendar year is $11,000. This includes any bond entitlement for the current year.

Beginning January 1, 2011, balances of available unused bond entitlements will be determined and maintained by ESDC, based on the beneficiary’s family net income in the year of entitlement.

Starting in 2011, the unused bond entitlements from 2008, 2009 and 2010 will be paid out using the carry forward provision.

No bond can be applied to a previous year in which the beneficiary was not a Canadian resident or eligible for the DTC.

No separate application is required to access unused bond entitlements. Bond entitlements are calculated automatically.

3.1. Timetable

The carry forward provision of bond entitlements came into effect on January 1, 2011, with payments beginning in 2012. Bonds are generally paid in February of the same calendar year as entitlement or when the bond is applied for (whichever comes first).

3.2. Bond and Carry Forward Calculations

The maximum lifetime bond limit is $20,000 per beneficiary.

The maximum annual amount that can be carried forward and paid into an RDSP is $11,000.

1.0. The Application Process

Who is involved?

The process of applying for the grant and/or the bond includes the participation of the following:

• the financial institution;
• the holder;
• the beneficiary or the legal representative; and
• the Primary Caregiver (PCG)
  • for years the beneficiary is under the age of 18; and/or
  • if the carry forward period includes a time when the beneficiary was under the age of 18.

The following provides an overview of the application process. For detailed information, see Chapter 4-3: Request for Grant and Bond.

The holder:

• Step 1: Contacts a participating financial institution that offers Registered Disability Savings Plan (RDSP) and opens an RDSP.
• Step 2: Names the beneficiary of the RDSP.
• Step 3: Completes the Application for the grant and/or the bond and related annex(es), where applicable.

The financial institution:

• Step 1: Verifies the accuracy of the information.
• Step 2: Ensures all applicable sections are completed and holder and/or beneficiary consent is provided.
• Step 3: Transmits the information to Employment and Social Development Canada (ESDC) through the Canada Disability Savings Program system (CDSP system).

To apply for the grant and/or the bond, the holder must complete and sign the following:

• Application for Canada Disability Savings Grant and/or Canada Disability Savings Bond [ESDC EMP 5608]
• Annex A – Joint Holder (if applicable) [ESDC EMP 5609]
• Annex B – Primary Caregiver (if applicable) [ESDC EMP 5610]

For the application to be processed, it is important to complete all parts of the forms correctly and sign the applicable declaration and consent(s). Failure to do so could result in the non-payment of the grant and/or the bond.

If at the time of application the beneficiary is under the age of majority ^{Footnote 11} or was under the age of majority at any time in the previous 10 years (starting in 2008); Annex B should be completed as the beneficiary may be eligible to claim unused grant and/or bond entitlements under the carry forward provision. (See section 4 of this document for more information.)

The financial institution will process the application and submit the request to ESDC.

1.1. Downloading the Forms

To download the application form, Annex A and/or Annex B, visit the RDSP, grant and bond issuers Web page.

2.1. Information About the Beneficiary (Section 1)

The following beneficiary information is required:

• last name and first name;
• middle name (if applicable);
• date of birth (YYYY-MM-DD); and
• Social Insurance Number (SIN).

The name must be entered exactly as it appears on the SIN documentation. Otherwise, it may be rejected.

2.2 Information About the Holder (Section 2)

This section must be completed only if the holder is different from the beneficiary of the RDSP. The holder also completes and submits the signed form to the financial institution.

If the holder is also a primary caregiver, Annex B must be completed and submitted along with the main application. (See section 4 of this document for more information).

If there is more than one holder, each additional holder must complete a separate Annex A. (See section 3 of this document for more information).

For more information on holders, see chapter 1-1, section 3.2 (The Holder) of this guide.

2.3. Declaration of Refusal (Section 3)

By filling out the application form, the applicant is automatically requesting payment for both the grant and the bond.

If the applicant does not wish to request payment for the grant or the bond, he/she must check the box for the payment he/she does not wish to apply for. Otherwise, this section is to be left blank.

2.4. Declaration and Consent of the Holder (Section 4)

The signature of the holder in this section is required. Holder consent allows ESDC to process the application form, and pay the grant and/or the bond, where applicable.

The holder should be advised to carefully read sections 6 through 9 of the application to understand the terms and conditions under which he/she is providing consent before signing this section.

2.5. Declaration and Consent of the Beneficiary (Section 5)

• If the beneficiary is under 18 years of age, beneficiary consent is not required. Consent is obtained from the holder of the plan under section 4 of the application.
• If the beneficiary was under 18 years of age at the time of application but has since reached 18 years of age,he/she is required to provide consent in section 5 of the application form to authorize the sharing and use of personal information for the purposes of paying grant and/or bond. Failure to do so could result in the non-payment of the grant and/or the bond.
  • In order to pay the bond, which occurs in February of the year the beneficiary turns 19 years of age, ESDC must be able to determine the family income. To do so, ESDC requires the beneficiary’s consent to access their personal information.
• If the beneficiary is 18 years of age or older at the time of application, is contractually competent and is also the RDSP holder, he/she is not required to provide his/her consent in section 5 as it will be obtained in section 4 of the application.
• If the beneficiary is 18 or over at the time of application; however, contractual competency is in doubt, a Qualifying Family Member (QFM), legal representative or agency can sign on behalf of the beneficiary.

2.6. Conditions for Payments of the Grant and/or Bond (Section 6)

This section seeks to explain the conditions for payment of the grant and/or the bond into an RDSP. The holder should read this section prior to submitting an application.

2.7. Payment of the Grant and/or Bond (Section 7)

This section seeks to explain some of the administrative processes associated with the payment of the grant and the bond. The holder should familiarize himself or herself with the information prior to submitting an application.

2.8. Your Privacy Rights (Section 8)

This section explains why personal information is collected and how it is used, shared and protected. It also explains how one can access their personal information. The holder should be advised to carefully read this section prior to submitting an application.

2.9. Definitions (Section 9)

This section includes definitions of key terms for information purposes.

3.1. Information About the Joint Holder (Section A-1)

Joint holder(s) must provide the following personal information:

• last name and first name;
• middle name (if applicable); and
• Social Insurance Number (SIN).

3.2. Declaration and Consent of the Joint Holder (Section A-2)

The joint holder(s) should be advised to carefully read section 6 of the application form, as well as section A-3 of Annex A to understand the terms and conditions under which consent is provided before signing.

3.3. Your Privacy Rights (Section A-3)

This section explains why personal information is collected and how it is used, shared and protected. It also explains how the joint holder(s) can access their personal information. Joint holder(s) should be advised to carefully read this section prior to submitting an application.

4.1. Information About the Primary Caregiver (Section B-1)

The PCG is either:

• the individual (usually a parent) who is in receipt of the Canada Child Benefit (CCB) for the beneficiary; or
• the department, agency or institution that receives an allowance payable under the Children’s Special Allowance Act (CSAA).

4.2. Declaration and Consent of the Primary Caregiver (Section B-2)

This section is only intended for a PCG that is an individual.

Before signing, the individual PCG(s) should be advised to carefully read section B-4 of the Annex B to understand the terms and conditions under which they are providing consent.

4.3. Agency Attestation (Section B-3)

To be completed by the agency that received a payment under the Child Special Allowances Act (CSAA) in respect of the beneficiary in at least one month in the particular year.

The agency is required to enter the calendar year(s) for which they received a payment under the CSAA in the space provided and sign section B-3 of Annex B.

4.4. Your Privacy Rights (Section B-4)

This section explains why the personal information is collected and how it is used, shared and protected. It also explains how one can access their personal information. The PCG(s) should be advised to carefully read this section prior to submitting an application.

4.5. Additional Information (Section B-5)

This section includes definitions of key terms for information only.

5.1. Disability Tax Credit (DTC)

Should an individual (for example a beneficiary’s parent), other than the beneficiary (over the age of 18) have applied for or claimed the beneficiary’s DTC when the beneficiary was a minor, that individual’s file at CRA may have to be linked to that of the beneficiary, in order for DTC eligibility to be confirmed.

For further information regarding DTC, clients can contact CRA at 1-800-959-8281.

5.2. Personal Income Tax

ESDC will use the beneficiary’s family income (including spousal income) to determine eligibility for the grant and/or the bond, for all calendar years in which the beneficiary is 19 years old or older. The income data from two years back is used to establish family income (example: 2013 uses income information from 2011). If tax returns have not been filed, no bond will be paid and the matching grant rate will be 100%.

5.3. Replacement of Holder and Age of Majority

ESDC requires that the beneficiary provides consent in section 5 of the application form once he/she reaches the age of 18.

Whether or not the beneficiary can be added as a joint plan holder or replace the holder at that time will depend on the age of majority in the province or territory in which the beneficiary resides and what is included in the issuer's RDSP declaration of trust.

Regardless of whether the holder is being replaced or the beneficiary is being included as a joint holder to the plan, section 5 of the application form must be signed by the beneficiary and submitted electronically to ESDC when the beneficiary reaches 18 years of age.

1.1. Definition

A Revocation of Request for Canada Disability Savings Grants and/or Canada Disability Savings Bonds form is to be used by holders who wish to stop the payments of grant and/or bond into an RDSP.

1.2. Who Is Involved?

The process of initiating a grant and bond revocation request includes the participation of the following individuals:

• the holder
• the financial institution

RDSP holders complete, sign and return the Revocation Form to the financial institution. The financial institution submits a request to Employment and Social Development Canada (ESDC) to stop bonds and will not request grant on contributions. If the holder wishes to resume the payments of grant and/or bond in the Plan, he or she must complete, sign and submit a new Application for Canada Disability Savings Grant and/or Canada Disability Savings Bond to the financial institution.

2.1. Downloading the Forms

To download the Revocation form, visit the following Web address:

http://www.edsc.gc.ca/eng/disability/savings/issuers/index.shtml

2.2. How to fill the form

The holder must check the boxes at the top of the form to indicate that he/she wishes to revoke the request for grant, bond or both.

Enter the following information on page 1 of the form:

• holder name, address and telephone number
• beneficiary name
• issuer name, address and telephone number and RDSP Contract Number

The holder must read the document carefully to understand the terms in the “Conditions”, “Sharing of your Personal Information” and “Declaration and Consent of the Holder” sections on page 2.

The holder signs the “Declaration and Consent of the Holder” section at the bottom of page 2. Each RDSP issuer determines the number of copies requiring original signatures.

The holder checks the “yes” box above the signature line on page 2, which gives consent to the use and sharing of the holder personal information. The joint holder, if applicable, must also sign the form.

1.1. Order of Payments

When multiple grant and/or bond requests for the same beneficiary are received for the same monthly reporting period, the grant and/or bond will be paid to the first successfully submitted request.

1.2. Timeline for Payments

Grant and bond payments on a successfully processed transaction are paid to the financial institution on the last business day of the month.

2.1. Criteria

In summary, the following criteria must be met:

The beneficiary must:

• apply on or before December 31 of the year the beneficiary turns 49 years (if the beneficiary is also the holder);
• be a resident of Canada: at the time the contribution is made, at the time application for the bond is made, and immediately before the bond is paid;
• be eligible for the Disability Tax Credit (DTC);
• have a valid Social Insurance Number (SIN); and
• not be deceased.

For more detailed information on the grant and bond, please see Chapter 3-1 and Chapter 3-2.

2.2. Conditions

3.1. When Transactions Are Rejected

The ITS details the required format for each transaction type and provides the financial institution with the mandatory information required and validation rules for those transaction types. If transactions are not submitted in compliance with these formats and validation requirements, the transactions are rejected. Each transaction error, whether due to problems in format or invalid data, is reported back to the financial institution for correction and resubmission. This is done electronically via the Error Files.

These transaction errors include:

• failure to correctly format the file;
• failure to correctly format a transaction;
• failure to supply the necessary information for a mandatory field; and
• failure to comply with the CDSP system business rules.

The error files contain two different reports, Error Report (RT 801) and Severe Errors Report (RT 851). A list of error codes and possible resolution can be found appended to this document. See Section 4 for more information.

3.2. When Payments Are Refused

Refusal reasons explain why a successfully processed contribution or bond request transaction did not receive the full grant or bond payment. Refusal reasons are found in transaction position 66-67 in the Transaction Processing Report (RT 901).

Some of the most common reasons a transaction did not receive a grant or bond payment are:

• the beneficiary’s DTC eligibility is not confirmed;
• the beneficiary does not meet the age requirements; and
• the maximum grant and bond entitlements have already been paid out.

3.3. Submitting Common Corrections

2.1.1. Full Repayment Calculation

Example

A DTC-eligible beneficiary who is contractually competent opens an RDSP in 2008 at the age of 25. The beneficiary dies on January 4, 2021, but the transaction is only sent on June 4, 2021. In this scenario, the AHA is calculated from January 5, 2011, to January 4, 2021, with the repayment period being from January 5, 2011, to the current date (June 4, 2021).

Image Description

A DTC eligible beneficiary who is contractually competent opens an RDSP in 2008 at the age of 25. In 2008, the beneficiary received $2,500 in grant and $1,000 in bond, in 2009, the beneficiary received $1,000 in bond, in 2010, the beneficiary received $3,500 in grant and $1,000 in bond, in 2011, the beneficiary received $1,000 in bond, in 2012, the beneficiary received $2,500 in grant and $1,000 in bond, in 2013, the beneficiary received $1,000 in bond, in 2014, the beneficiary received $3,500 in grant and $1,000 in bond, in 2015, the beneficiary received $2,500 in grant and $1,000 in bond, in 2016, the beneficiary received $3,500 in grant and $1,000 in bond, in 2017, the beneficiary received $1,000 in bond, in 2018, the beneficiary received $2,500 in grant and $1,000 in bond, in 2019, the beneficiary received $3,500 in grant and $1,000 in bond, in 2020 , the beneficiary received $1,000 in bond. The beneficiary dies on January 4, 2021. In this scenario, all grant and bond paid from January 5, 2011 to January 4, 2021 must be repaid.

2.2.1. Proportional Repayment Calculation

3.2.1. Loss of DTC Eligibility and No Election

When a beneficiary is no longer eligible for the DTC and no election is made to keep the RDSP open, the RDSP must be closed by December 31 of the year following the year that the beneficiary lost his or her DTC eligibility. The grant and the bond paid into the RDSP during the 10 years preceding the beneficiary’s loss of DTC eligibility and up to the current date, in this case December 31, 2022, must be repaid.

Image Description

The opening of the RDSP is in 2010 and the beneficiary is DTC “yes” until December 31, 2020. From January 1, 2021 to December 31, 2022, the beneficiary is no longer DTC eligible. The contract closes on December 31, 2022. The period that must be considered to calculate the amount to be repaid is between January 1, 2011 and December 31, 2020.

3.2.2. Loss of DTC Eligibility and Election

When a beneficiary is no longer eligible for the DTC and has not regained their DTC eligibility during the five year period of the election, the RDSP must be closed by December 31 of the year following the election period. The grant and the bond paid into the RDSP during the 10 years preceding the beneficiary’s loss of DTC eligibility, up to the current date, in this case December 31, 2026, must be repaid.

Image Description

The opening of the RDSP is in 2010 and the beneficiary is DTC “yes” until December 31, 2020. From January 1, 2021 to December 31, 2025, the beneficiary is no longer DTC eligible. This is the election period. The contract closes on December 31, 2026. The period that must be considered to calculate the amount to be repaid is between January 1, 2011 and December 31, 2020.

3.3.1. Loss of DTC Eligibility and No Election

Image Description

The opening of the RDSP is in 2014 and the beneficiary is DTC “yes” until December 31, 2023. From January 1, 2024 to December 31, 2025, the beneficiary is no longer DTC eligible. In November 2025, there is a DTC event. The AHA repayment included 10 years prior to loss of DTC + the period until the date of the event.

3.3.2. Loss of DTC Eligibility and Election

If a trigger event occurs during an election period, the AHA is required to be repaid. The AHA period will start 10 years prior to the loss of DTC and end the date of the event, even if it surpasses 10 years.

Image Description

The opening of the RDSP is in 2014 and the beneficiary is DTC “yes” until December 31, 2023. From January 1, 2024 to December 31, 2028, the beneficiary is no longer DTC eligible. This is the election period. In February 2027, there is an event. The election period will now be from January 1, 2014 to the date of the event. The AHA repayment included 10 years prior to loss of DTC + the period until the date of the event.