RDSPs Flashcards
What is an RDSP.
A savings plan to assist for saving for a person eligible for the disability tax credit (DTC)
What is the lifetime maximum contribution limit for an RDSP?
$200,000
There are no annual limits
Are RDSP contributions tax deductible?
No
How long can contributions be made to an RDSP?
Age 59 for the beneficiary
How is the Canada Disability Savings Grant (CDSG) paid?
CDSG pays a maximum of $70,000 until the year the beneficiary turns 49.
CDSG pays the following on family income up to a certain threshold ($97,069):
If below threshold
- $3 for every $1 up to $1500/year on the 1st $500 contribution
- $2 for every $1 up to $2000 on the next $1000 contributed
If above threshold
- $1 for every $1 up to $1000
What is a Canada Disability Savings Bond (CDSBs)?
A CDSB is a payment of $1000/year to low income families with disabilities that is paid by the government into an RDSP and does not require a matching contribution to be paid.
Government pays $1000/year.
It can be paid until beneficiary turns 49.
What is the lifetime maximum limit for the CDSB?
$20,000
What is the carry forward provision for CDSGs and CDSBs?
Can carry forward unused CDSGs and CDSBs up to 10 years.
Annual maximum of $10,500 for the grant and $11,000 for the bond.
When do CDSGs and CBSBs have to be repaid?
When grants and bonds paid into the plan in 10 years before one of these events:
RDSP is terminated
Plan is deregistered
DAP (disability assistance payment) is made from plan
Beneficiary ceases to be eligible for disability amount
Beneficiary dies
What is the assistance holdback amount?
The repayment of CDSGs and CDSBs
AHA = CDSGs and CDSBs paid in 10 years into an RDSP - any repayments within that same period
What are the payments that can be made from an RDSP?
- Payments to the beneficiary - known as disability assistance payments (DAP)
- Payments to the beneficiary’s estate after death
- Repayments of grants and bonds
What is the tax treatment for RDSP when payments are made to a beneficiary?
The CDSG, CDSB and investment income earned in the RDSP are included in the beneficiary’s income for tax purposes but excluded for calculating GST/HST credit and canada child care benefit (CCB), the working income tax benefit (WITB), and refundable medical expense supplement.
Contributions withdrawn are not included in the income.
When must RDSP withdrawals start for a beneficiary?
At age 60
What is the income threshold above which no bond (CDSB) is paid if a family’s net income surpasses that threshold?
$48,535
If income is < $31,711 - $1000 bond/ year is paid
If income is 31,711 < x < $48,535 bond is prorated between $0 and $1000/year
If income is > $48,535 then $0 bond is paid
What is a specified disability savings plan?
A specified disability savings plan (SDSP) is a plan that provides beneficiaries with a shortened life expectancy greater flexibility to access their RDSP.
