If having a family member with a disability has caused you concern with respect to their future financial security, a Registered Disability Savings Plan (RDSP) can help you save up to $200,000 in a tax-deferred account on their behalf.
The plan is meant for a disabled beneficiary who is 59 years of age or younger and qualifies for the disability tax credit.
An RDSP is similar to a Registered Education Savings Plan (RESP) in that it includes grant and bond incentive programs. The incentives come in 2 forms: the Canada Disability Savings Grant (CDSG), which is an income-tested matching grant, and the Canada Disability Savings Bond (CDSB), which is an income-tested bond.
With RDSPs, money contributed is not tax deductible, there are no annual contribution limits and earnings and growth on all contributions accrue on a tax-deferred basis.
The amount of the grants and bonds that can be received is based on family income, which is determined by the age of the disabled beneficiary. If the RDSP beneficiary is 18 years or younger, the family income of the beneficiary's parents or guardian determines the amount of the grants and bonds. Beyond age 18, however, it is the beneficiary's own family income that determines the amounts.
Canada is the first country in the world to have a RDSP, offering families a way to provide for the future financial security of their loved ones with disabilities.