Canada Disability Savings Bonds For Low Income Families
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Not too long ago, I had a meeting with a client, she is a single mom to a daughter with autism. During our conservation, she revealed that she is unemployed and does not have much savings. However, she really hopes that she could save some money for daughter’s future. After knowing that her daughter has already been approved for the disability tax credit many years ago, and her family income is relatively low, I advised her to consider opening a Registered Disability Savings Plan (RDSP) for her daughter. She is concerned that she is unable to make any contribution to this account, I illustrated to her even when no contribution is made, her daughter might be qualified for the Canada Disability Savings Bonds (CDSB) within the RDSP.
The way this works is for low-income families, the Government of Canada may deposit up to $1,000 a year into their RDSP. According to the 2013 CDSB’s figures, for * families with net income: (Click here for the 2017’s income matching rate charts)
- Up to or equal to $25,356, the maximum annual CDSB is $1,000
- Between $25,356 and $43,561, the $1,000 CDSB is reduced on a prorated basis
- Over $43,561, no bond will be paid
* Note that for minor beneficiary, the family net income is that of his or her parents, while beneficiary over the age of majority, the family net income is that of the beneficiary and his or her spouse, if applicable. The income threshold figures are being updated annually.
In addition to the CDSB for the current year, if the beneficiary had been eligible for the disability tax credits in the previous years, while the net income of their family were not beyond the CDSB limit, they could be entitled for those years as well. The carry forward periods could go back to 2008 or to a period of 10 years, whichever the later. The lifetime CDSB payments are $20,000 per beneficiary.
“The lifetime CDSB payments are $20,000 per beneficiary.”
In this case, the daughter has been qualified for the disability tax credits before 2008. Since it is 2013 now, she may receive the CDSB for the years from 2008 to 2013. We then setup the Registered Disability Savings Plan. Today when I login online to review over her account, my client still have not made any contribution into the account, but there is $6,000 of Canada Disability Savings Bonds sitting in her RDSP.
(Updates: As of March 23, 2017, this client already received $9000 of CDSBs)
- Disclaimer: The above figures are only for general understanding purposes, and not intend to provide specific financial advice. The amount of government grants and bonds one could receive depends on many factors such as the eligibility of the disability tax credit, family net income, age, therefore, they could be differed for each individual’s case. Market conditions, tax laws, and investment factors are subject to change. Individual should always consult with a financial professional before making any decision