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Why Should I Open an RDSP Account?

This Page Explains Why RDSP is a Great Savings Plan

Why Should I Open an RDSP Account?

Canada Disability Savings Grant

The grant is an amount that the Government of Canada contributes to a registered disability savings plan (RDSP). The Government will pay matching grants of 300%, 200%, or 100%, depending on the beneficiary’s family income and the amount contributed. The beneficiary’s family income is calculated as follows:
  • From birth to December 31 of the year the beneficiary becomes 18 years of age, the beneficiary’s family income is based on the income information used to determine the Canada child benefit (CCB) for that beneficiary.
  • Beginning the year the beneficiary becomes 19 years of age until the RDSP is closed, the beneficiary’s family income is based on his or her income plushis or her spouse’s, or common-law partner’s income. To qualify for the bond or to earn a grant, the beneficiary must file income tax and benefit returns for the past two years and all future tax years when he or she has an RDSP.
  • If the beneficiary is under the care of a department, agency, or institution for at least one month in the year, the grant is based on the allowance payable to the department, agency, or institution under the Children’s Special Allowances Act.

An RDSP can get a maximum of $3,500 in matching grants in one year, and up to $70,000 over the beneficiary’s lifetime. A beneficiary’s RDSP can receive a grant on contributions made until December 31 of the year in which the beneficiary turns 49.

The amount of the grant is based on the beneficiary’s family income. The beneficiary family income thresholds are indexed each year to inflation. The income thresholds for 2016 are as follows:

Amount of CDSG grant when family income is $93,208* or less:

  • on the first $500 contribution—$3 grant for every dollar contributed, up to $1,500 a year.
  • on the next $1,000 contribution—$2 grant for every dollar contributed, up to $2,000 a year.

Amount of CDSG grant when family income is more than $93,208*:

  • on the first $1,000 contribution—$1 grant for every dollar contributed, up to $1,000 a year.

*As of year 2020, indexed every year.

Canada Disability Savings Bond

The bond is an amount paid by the Government of Canada directly into an RDSP. The Government will pay bonds of up to $1,000 a year to low-income Canadians with disabilities. No contributions have to be made to get the bond. The lifetime bond limit is $20,000. A bond can be paid into an RDSP until the year in which the beneficiary becomes 49 years of age.

The amount of the bond is based on the beneficiary’s family income. The beneficiary family income thresholds are indexed each year to inflation. The income thresholds for 2018 are as follows:

  • $30,450 or less (or if the holder is a public institution), the bond is $1,000;
  • between $30,450 and $46,605, part of the $1,000 is based on the formula in the Canada Disability Savings Act;
  • more than $46,605, no bond is paid.

Before the end of the year you turn 49 years of age, you can carry forward up to 10 years of unused grant and bond entitlements to future years, as long as you met the eligibility requirements during the carry-forward years (i.e. you were eligible to claim the disability tax credit and you were a Canadian resident). If an RDSP was opened:

  • in 2016, the carry forward period would be from 2008 (the year RDSPs became available) to 2016;
  • in 2020, the carry forward period would be from 2010 to 2019.

The grant and bond will be paid on unused entitlements up to an annual maximum of $10,500 for the grant and $11,000 for the bond.

More questions about RDSP?

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