Put money into a registered disability savings plan
From: Canada Revenue Agency
Contributions
The person or organization who enters into a registered disability savings plan (RDSP) agreement with a participating financial institution has the authority to contribute to that RDSP. They can also authorize others to make contributions to the RDSP by giving the financial institution their written consent.
The financial institution can accept contributions from authorized individuals and organizations if:
- the beneficiary is 59 years old or younger at the end of the year the contributions are made
- the beneficiary is eligible for the disability tax credit at the time of the contribution
- the beneficiary is resident in Canada for tax purposes at the time of the contribution
- the contribution plus all prior contributions for the beneficiary is $200,000 or less
Contributions are not tax deductible. However, earnings on the contributions are tax-exempt while they stay in the plan.
Government grant
An eligible person or organization can apply for the beneficiary to receive Canada disability savings grants. After the application is made, the Government of Canada will deposit matching grants of up to 300 percent, into a beneficiary’s RDSP. The amount of grants deposited depends on the beneficiary's family income and contribution(s) to the RDSP. The beneficiary can receive a maximum amount of $3,500 in grants per year. If the beneficiary has unused grant entitlements then they can receive a maximum amount of $10,500 in grants per year. There is a contribution limit of $70,000 over the beneficiary’s lifetime. Grants are paid on contributions that are made up to and including December 31 of the year the beneficiary turns 49 years of age.
Contributions that are paid to an RDSP after the annual grant deposit limit is reached will not receive matching grant. Contributors cannot receive a refund of their contributions after they are put in an RDSP. RDSP administrators should ensure that authorized contributors are aware of these rules.
For details: How much you could get in grants and bonds.
Government bond
If an eligible person or organization applies for the beneficiary to receive Canada disability savings bonds, the Government will deposit bonds into the RDSPs of low and modest income beneficiaries. If a beneficiary qualifies, they can receive up to $1,000 a year in bond, depending on their family income. The lifetime bond limit is $20,000. Bonds are paid into the RDSP if an application to receive bonds has been made on or before December 31 of the year the beneficiary turns 49 years of age.
For details: How much you could get in grants and bonds.
Retirement savings rollovers
A retirement savings rollover is a tax-deferred transfer of funds from a deceased parent or grandparent’s registered plan(s) to a beneficiary’s registered disability savings plan (RDSP). The beneficiary must be financially dependent on the parent or grandparent immediately before their death.
The beneficiary’s financial dependency must be due to their mental or physical disability. Only eligible funds can be rolled over. These are:
- A refund of premiums from a deceased parent or grandparent’s registered retirement savings plan
- An eligible amount from a deceased parent or grandparent’s registered retirement income fund
- An eligible lump sum payment from a deceased parent or grandparent’s registered pension plan, specified pension plan, or pooled registered pension plan
The financial institution administering the RDSP can authorise a retirement savings rollover if:
- the beneficiary is 59 years old or younger at the end of the year
- the beneficiary is resident in Canada for tax purposes at the time of the rollover
- the rollover plus all prior contributions and rollovers for the beneficiary totals $200,000 or less
A retirement savings rollover does not attract the Government grant.
For more information on conditions and processing requirements, see Part I – Rollovers in IC99-1R Registered Disability Savings Plans.
Education savings rollovers
An education savings rollover is a tax-deferred transfer from a beneficiary’s registered education savings plan (RESP) to their registered disability savings plan (RDSP). An education savings rollover does not attract the Government grant.
These conditions must be met for an education savings rollover to take place:
- The amount rolled over must be an accumulated income payment from the beneficiary’s RESP, and
- The beneficiary must not be able to go to school because of a mental impairment, or
- The RESP has either been open for
- more than 35 years, or
- at least 10 years and each beneficiary under the RESP is at least 21 years old and is not eligible to receive educational assistance payments.
- The RESP has either been open for
The financial institution administering the RDSP can accept an education savings rollover if:
- the beneficiary is 59 years old or younger at the end of the year
- the beneficiary is eligible for the disability tax credit at the time of the rollover
- the beneficiary is resident in Canada for tax purposes at the time of the rollover
- the rollover plus all prior contributions and rollovers for the beneficiary totals $200,000 or less
For more information on conditions and processing requirements, see Part I – Rollovers in IC99-1R Registered Disability Savings Plans.
Related links:
Income Tax Act, Section 146.4
Income Tax Act, Section 146.1(1.1) and (1.2.)
Income Tax Act, Section 60.02
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