Jul
30
2008

Registered Disability Savings Plan (RDSP)

The recent federal Budget has proposed the creation of a Registered Disability Saving Plan (RDSP) commencing 1 December 2008. Contributions will not be tax deductible, but will have both modest and major matching contributions by the federal government.

It will only be available to families whose child qualifies for the ‘disability tax credit’ or disability amount in the Income Tax Act. The child must be approved by Canada Revenue Agency (CRA) as being ‘markedly restricted’ in the activities of daily living in one or more of several ways.

This plan, which is very similar to the already established RESP, (Registered Education Savings Plan), will allow contributions to the RDSP by family and friends of a person with marked disabilities. These contributions will not be tax deductible by the contributor, but the investment earnings in the plan will be tax deferred until withdrawal.

The lifetime RDSP contributions will have a limit of $200,000.

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