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1. Receive up to $70,000 from the federal government in matching contributions. The federal government has implemented the Canada Disability Savings Grant program to assist Canadians with disabilities to save for their futures.

The federal government will contribute up to $3,500 per year to your RDSP through the Canada Disability Savings Grant program, if your net family income is below $81,941. (Family income is that of the beneficiary if the beneficiary is 18 years or older). The government’s matching contribution rates are as follows:

– $1,500 on the first $500 that you or your family contribute to your RDSP, and

– $2,000 on the next $1,000 that you contribute.

2. Receive up to $20,000 from the federal government without making a contribution. The Canada Disability Savings Bond program will contribute up to $20,000 into your RDSP if you have a low income.

The federal government will contribute $1,000 per year to your RDSP through the Canada Disability Savings Bond program, if your net family income is below $23,855. (Family income is that of the beneficiary once the beneficiary is 18 years or older.) A smaller amount is contributed into your RDSP if your incomes is between $23,856 and $40,970 – all without you making a contribution yourself.

3. Saving in an RDSP doesn’t affect other disability benefits. Your provincial disability benefits are not affected when you save in an RDSP, no matter what province or territory you live in. Federal government benefits, like Canada Pension Plan, Disability Benefits, Old Age Security and Guaranteed Income Supplement are also not affected.

When it comes time to withdraw your money from your RDSP, the federal government – and most provincial governments – have said that you can use any amount from your RDSP without affecting your benefits.

Quebec, New Brunswick and Prince Edward Island have said that your benefits won’t be affected until your monthly income is greater than a certain amount. (In New Brunswick, you can receive $800 per month; in Quebec, $300 per month; and in PEI, you can receive an amount that brings your income to the low income levels as defined by the National Council of Welfare.)

Remember that when you turn 65, your go off of your provincial disability benefits and on to the federal government programs for seniors: Old Age Security and Guaranteed Income Supplement.

4. Compound Interest. When you save money and invest it in an RDSP, it begins to earn you income. After only a few years, your RDSP’s annual investment income is greater than your annual $1,500 contribution. You can see in the table below that if you earn 5% on your savings, your annual investment income is greater than your annual contributions after only 5 years.

    Your Contributions Federal  Gov. Contributions Income on Investment Total RDSP Savings
    Year 1
    $1,500
    $4,500
    $300
    $6,300
    Year 2
    $1,500
    $4,500
    $615
    $12,915
    Year 3
    $1,500
    $4,500
    $946
    $19,861
    Year 4
    $1,500
    $4,500
    $1,293
    $27,154
    Year 5
    $1,500
    $4,500
    $1,658
    $34,811

 

5. You can spend your RDSP money on anything you want. Neither the federal government nor provincial governments have placed restrictions on what you can spend your RDSP money on. It’s yours – you can do what you want with it.

6. Anyone can make contributions to your RDSP. You. Your parents. Your grandparents. Your brothers, sisters, aunts and uncles. Even your friends. And when they contribute, the federal government contributes even more – up to three times more!

7. If you receive a lump sum amount, you can shelter you money in an RDSP. If you receive an inheritance, a legal settlement or a large severance payment, you may be able to put it into an RDSP for future use without affecting your federal or provincial disability benefits.

8. The income that you earn on your savings in an RDSP is tax deferred. You only have to pay tax when you make withdrawals from your RDSP. And you pay tax only on the government contributions and the investment income in your RDSP. You don’t pay tax on the money that you have contributed.

9. People will begin to see you differently. People have told us that when they own a valuable asset, others treat them like investors, customers and home owners rather than people with disabilities.

10. You will have more choices. Think what a difference it would make to have a bit more money so that you could begin to do things that you can’t financially do now.

(from www.rdspresource.ca)

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To find out about the RDSP, whether you qualify, and where you can sign up, visit www.rdsp.com .

As we follow the ongoing saga of the RDSP, I find it useful to provide some important tips for preparing to set up an RDSP and what you should be aware of when you do.

As we have mentioned before on this blog, and as is mentioned in far greater detail on www.rdsp.com, in order to be eligible for the RDSP you will have to follow 4 Key Steps.  These Steps are:

1)  Make sure you are eligible and apply for the Disability Tax Credit.

2)  Have a valid Social Insurance Number.

3)  File a 2006 and 2007 tax return (the amount of Grant and Bond will be determined by your income reported on your tax return from two years prior).  If you want to receive a Grant and Bond for 2008, you will need to have filed your tax return for 2006.

4) If your setting up an RDSP for a child, make sure you apply for the Canada Child Tax Benefit.

With the only a few financial institutions likely to be ready to issue the RDSP in December (although we have heard there may be a national bank offering the RDSP before the end of the month), it will be essential that people are prepared.  If you are planning to capitalize on the Grant and Bond for 2008 (I realize this is going to be pretty tight for most people), and a financial institution is able to offer you a plan, make sure you have that 2006 tax return filed.

To find out about the RDSP, whether you qualify, and where you can sign up, visit www.rdsp.com

On December 3rd PLAN and PLAN Institute gathered with friends, partners, and supporters to celebrate a historic milestone.   After years of hard work, advocacy, and partnership, the Registered Disability Savings Plan became a reality on December 1st.  During the celebration there were speeches by Al Etmanski, President and Co-Founder of PLAN, MLA Claude Richmond, Jack Styan, Executive Director of PLAN, Vickie Cammack, Executive Director of PLAN Institute, and Rob and Kathy Bromley, PLAN Lifetime members. 

These speeches spoke to the power of the RDSP and the work that has gone into implementing the plan.  We also had some families come up and speak about how they see themselves using the RDSP when it becomes available.

PLAN Executive Director Jack Styan explaining the impact of the RDSP for Canadian families

PLAN President Al Etmanski and MLA Claude Richmond discussing social finance and the innovation of an RDSP

PLAN Lifetime Members Rob and Cathy Bromley sharing the meaning of the RDSP for their family

At the celebration the BC Government announced that they will be publishing 40,000 copies of the book Safe and Secure – RDSP Edition to disseminate free to individuals and families across the province to help people plan for the future and understand things like the RDSP, trusts, wills and estates, supported decision-making, etc…  These books will be available to families sometime in the new year.

Planned Lifetime Advocacy Network (PLAN) is delighted to have been selected as a finalist from 245 entries across 43 different countries in Ashoka’s Changemakers.net global competition. The competition has been created to highlight outstanding demonstrations of innovation, social impact, and sustainability from across the globe.  PLAN was selected for our work on the Registered Disability Savings Plan (RDSP).  

To win, PLAN’s entry must get more votes than the other contestants. Your vote will help.

To VOTE and support the continued policy efforts of PLAN follow the 5 steps below:

1) Register and create your profile (here)

2) Receive confirmation e-mail from Ashoka with username and password

3) Continue to the competition page (here) and click on “Vote for Winners”.

4) Click on “login” and enter your user name and password

5) Scroll down to “List of Finalists” and select “Registered Disability Savings Plan, Planned Lifetime Advocacy Network”, along with two other entries (for a summary of entries click (here)

Vote by November 24th !  

3 winners will be announced and will have their social innovation highlighted by the Changemakers.net. By supporting PLAN’s work on the RDSP you can help raise the awareness of the RDSP around the world.

Thank you for your continued efforts to support PLAN and our policy work.

As the Registered Disability Savings Plan (RDSP) received royal assent and continues to gain momentum within the provinces, it is becoming increasingly likely that the RDSP may be available by late 2008 (as forecasted by the federal government).

It is now becoming more and more important for people to apply for the Disability Tax Credit (DTC) which is the eligibility criteria for the RDSP. If you want to be able to set up a RDSP for you or your family member, it will be essential that you apply for the DTC (before or along with this upcoming 2007 tax return).

This means that if the RDSP becomes available in late 2008, you or your family member will be able to set up a RDSP and begin receiving the Canada Disability Savings Grant and Canada Disability Savings Bond as soon as possible. Only those with a DTC will be eligible to establish a RDSP and receive the Grant and Bond in 2008. The Canadian Revenue Agency looks at your prior year’s tax return and DTC for the RDSP and corresponding Grant and Bond.

How do I apply and qualify for the Disability Tax Credit?

For this particular credit you will need to get the T2201 Disability Tax Credit Certificate from the Canadian Revenue Agency (CRA) and apply. Unlike many of the other available credits, rebates and deductions, this tax credit cannot be applied for on your tax return.

In order to receive a copy of the T2201 form you should visit the CRA’s website (http://www.cra.gc.ca/forms) or call 1-800-959-2221. Once you download or receive your certificate, you will notice that there are two portions to the T2201 form, Part A and Part B. Part A is the personal information that must be filled out by the applicant (or guardian), while Part B must be filled out by a qualified practitioner who will certify the effects of your impairment. The CRA defines a “qualified practioner” as a certified medical doctor, optometrist, audiologist, occupational therapist, physiotherapist, psychologist and a speech-language pathologist.

Once you have completed your portion of the form and your qualified practitioner has completed their portion of the form, you can send it in to your local CRA tax office (check http://www.cra-arc.gc.ca/contact/tso-e.html or call 1-800-959-8281). You can send your T2201 Disability Tax Credit Certificate any time, but it should be sent before or with your tax return so you can be accepted as soon as possible. By sending your form before you file your tax return, you may prevent a delay in your assessment. The CRA will review your application before they assess your return.

Once the Disability Certificate is obtained and accepted by the Canada Revenue Agency, it will continue to be valid for each subsequent tax year until the person’s condition changes. Therefore, it is not necessary to obtain a new Disability Certificate each year, unless so requested by the CRA.

So make sure you or your loved one apply for the Disability Tax Credit!

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