Understanding the Registered Disability Savings Plan (RDSP)

The Registered Disability Savings Plan (RDSP) is a savings plan offered by the Canadian government to help individuals with disabilities and their families save for the future. The plan is designed to provide financial security and independence for individuals with disabilities, and to help them meet the long-term costs of disability.

To qualify for an RDSP, an individual must be a resident of Canada and have a valid Social Insurance Number (SIN). In addition, the individual must be eligible for the Disability Tax Credit (DTC), which is determined by the Canada Revenue Agency (CRA).

The DTC is a non-refundable tax credit that helps individuals with disabilities or their supporting persons reduce the amount of income tax they may have to pay. To qualify for the DTC, an individual must have a severe and prolonged impairment in physical or mental functions. This can include a wide range of conditions such as autism, Down Syndrome, cerebral palsy, multiple sclerosis, mental health disorders such as depression or anxiety, ADHD and other attention-deficit/hyperactivity disorders, and conditions such as severe migraines that significantly impede on an individual's ability to perform the basic activities of daily living.

It's important to note that some of the less known disabilities that qualify for DTC, including some of the mental health conditions, and chronic pain, which is often caused by conditions such as fibromyalgia, complex regional pain syndrome and chronic fatigue syndrome.

To claim the DTC, an individual must complete a T2201 Disability Tax Credit Certificate form, which must be signed by a qualified medical practitioner, such as a doctor or nurse practitioner. The medical practitioner must certify that the individual has a severe and prolonged impairment, and that the impairment affects the individual's ability to perform a basic activity of daily living.

Once an individual has been approved for the DTC, they can open an RDSP and begin to make contributions to the plan. Contributions to the RDSP are not tax-deductible, but they are eligible for a Canada Disability Savings Grant (CDSG) and a Canada Disability Savings Bond (CDSB). The CDSG and CDSB are government-funded programs that provide additional financial assistance to individuals with disabilities and their families to help them save for the future. One of the provisions of these grants and bonds is the ability to catch up on missed years, going back to the date of diagnosis. This means that if an individual was diagnosed with a qualifying condition and did not apply for the DTC or the grants and bonds at that time, they can go back and apply for the missed years. Note: Matching Government Grants and Bonds are available each year until the beneficiary turns 49.

It's very important to note that the medical practitioner's role is vital as they play a significant role in determining whether an individual qualifies for the DTC and thus the RDSP, So it is important to talk to your doctor or any other qualified medical practitioner about the possibility of claiming the DTC and opening an RDSP.

In conclusion, the Registered Disability Savings Plan (RDSP) is a valuable tool for individuals with disabilities and their families to help them save for the future. If you or a loved one has a severe and prolonged impairment, be sure to talk to your doctor or any other qualified medical practitioner about the possibility of claiming the Disability Tax Credit and opening an RDSP.

Click the button below for a brief guide on how to apply and a list of common conditions that could qualify you for the Disability Tax Credit and an RDSP.

DTC Guide