Money Matters

In 2008, the Government of Canada announced two new savings plans for Canadians, one of which is designed specifically for disabled Canadians.  Some details are outlined below.

RDSP - 

Registered Disability Savings Plan

A Registered Disability Savings Plan (RDSP) helps people with disabilities and their families save for the future.

Contributions to RDSPs may be supplemented by a Canada Disability Savings Grant and Canada Disability Savings Bond.

RDSP delivered by : Canada Revenue Agency (CRA)

Grant and bond delivered by: Human Resources and Skills Development Canada (HRSDC)

Eligibility Information

Any person who is:

• Eligible for the Disability Tax Credit (Disability Amount );
• A Canadian resident with a Social Insurance Number (SIN #); and
• Under 60 years of age.

If the person is a minor, their parent or legal representative may establish the RDSP for their benefit.

Application information

Several financial organizations offer the RDSP, Canada Disability Savings Grant and Canada Disability Savings Bond. To open an RDSP, contact a participating financial organization to complete a registration form.

Additional information

The lifetime contribution limit for an RDSP is $200,000, with no annual limit. Anyone can contribute to the RDSP with the written permission of the plan holder. Contributions are not tax-deductible and are not included in income when paid out of an RDSP. Investment income earned in the plan accumulates tax-free. However, grants, bonds, and investment income earned in the plan are included in the beneficiary’s income for tax purposes when paid out of the RDSP.

The Ontario government has announced that RDSP contributions and payments from RDSPs will not impact eligibility for social assistance. For more information, see the attached link to the Government of Ontario.

Related information

• The Government may pay a matching Canada Disability Savings Grant of up to $3,500 a year on contributions.

The Government may also pay a Canada Disability Savings Bond of up to $1,000 a year into the RDSPs of low-income and modest-income Canadians. The bond is paid into an RDSP even if no contributions were made to the plan.

TFSA -

The new Tax-Free Savings Account (TFSA) is a flexible, registered general-purpose savings vehicle that allows Canadians to earn tax-free investment income to more easily meet lifetime savings needs. The TFSA complements existing registered savings plans like the Registered Retirement Savings Plans (RRSP) and the Registered Education Savings Plans (RESP).

How the Tax-Free Savings Account Works

• Canadian residents age 18 or older can contribute up to $5,000 annually to a TFSA.
• Investment income earned in a TFSA is tax-free.
• Withdrawals from a TFSA are tax-free.
• Unused TFSA contribution room is carried forward and accumulates in future years.
• Full amount of withdrawals can be put back into the TFSA in future years.
• Choose from a wide range of investment options such as mutual funds, Guaranteed Investment Certificates (GICs) and bonds.
• Contributions are not tax-deductible.
• Neither income earned within a TFSA nor withdrawals from it affect eligibility for federal income-tested benefits and credits, such as Old Age Security, the Guaranteed Income Supplement, and the Canada Child Tax Benefit.
• Funds can be given to a spouse or common-law partner for them to invest in their TFSA.
• TFSA assets can generally be transferred to a spouse or common-law partner upon death.

Click on the link provided for further information      www.tfsa.gc.ca