The Registered Disability Savings Plan (RDSP) was launched in December 2008 after a decade of community groups and government working together. The combination of individual/ family and government financial contributions into an RDSP helps people with disabilities to grow, manage and control a financial asset. The Canada Disability Savings Bond contributes towards low-income Canadian’s RDSP’s. Since 2008, people with disabilities have been able to start building stronger financial futures –they’ve opened 43,000 RDSP accounts and invested more than $200 million in RDSP’s across Canada. At the time of launch, there was a commitment to review the RDSP in 3 years – to look at what is working and what changes may be needed. The 3-year review is approaching and PLAN would like to hear your thoughts and feedback regarding this important program. Our intention is to listen, distill and take forward the experiences of individuals, families and communities to government decision makers.
If you haven’t already – let us know what you think by taking a few minutes to fill out our RDSP 3 Year Review Survey here!
RULE: In order to be eligible for an RDSP, you must first qualify for the Disability Tax Credit (DTC).
Qualifying for the Disability Tax Credit provides significant benefits beyond the RDSP. It reduces your taxable income, comes with a supplement for people under 18 years, can be transferred to an eligible family member and can be claimed for up to 10 years retroactively. Eligibility for the DTC also provides eligibility for additional credits and benefits. Qualifying for the DTC can be particularly challenging for people in a number of groups: people with episodic disabilities, people with mild developmental disabilities and learning disabilities. Furthermore, CRA is often qualifying people for fixed periods, for example until 19 or for 5 years. The result is that some people are denied access to the RDSP through the application process and others are deterred because they are concerned about their re-qualifying and their long-term eligibility.
The Policy in a Box
To determined DTC eligibility, one of these questions must be answered affirmatively:
- Do you have a mental or physical disability that is expected to last, or has lasted, one year or more?
- Does at least one of the following statements apply to you?
- You are blind
- You need extensive therapy or treatment
- You are limited in activities that people need to do regularly (for example: speaking, hearing, walking, using the bathroom, eating, getting dressed, remembering, banking, finding your way around, dealing with emergencies.)
The Fine Print: The DTC application form is made up of 2 parts. The person with the disability and/or support person must complete part of the form, and a doctor/specialist must complete the rest – to confirm the disability. Once the DTC form is sent to Canada Revenue Tax Centre it may take 6-8 weeks to hear back.
Why it matters:
Even though there would be no financial loss of private contributions should an RDSP collapse due to DTC ineligibility, the best case scenario is that the DTC and RDSP has some flexibility for those experiencing an episodic disability and/or disabilities that have a slow onset. If you’re having difficulty qualifying for the DTC, there are supports available – check out PLAN’s DTC specialists at the RDSP Resource Centre.
Questions: What has been your experience in applying for the DTC? What are some of the challenges in the DTC? What have been the benefits experienced from accessing the DTC? Are there any populations who are not served by the DTC but would benefit from the RDSP?
So, what do you think? We’d like to hear your experience and thoughts about the Disability Tax Credit eligibility and the RDSP.