Why My RDSP’s Matching Grant Is Less Than The Previous Year’s?
A number of families that I am working with already received their “Annual Statement of Grants Entitlement” from the government. Some of them contacted me and had the common questions “Why My RDSP Matching Grant Is Less Than The Previous Year’s?”
If one could recall, Canada Disability Savings Grants (CDSGs) are matching grants provided by the Government of Canada, where its purpose is to encourage families with disabilities to make contribution into their RDSP account in building up their long-term savings. The amount of matching grant one could receive would depend on several factors such as:
- The amount of contribution being made into the RDSP account
- The family net income of the disabled person
- The amount of matching grants carried forward from the previous years
The first two points are pretty self-explanatory, so I won’t go into details about them in this post.
The Registered Disability Savings Plan (RDSP) was launched back in 2008. One could actually retroactive their matching grants to 2008 or to the date that their disability tax credit was approved, whichever the later. For example, I have a client, middle-aged gentlemen with brain injury, his disability tax credit was approved in 2010, so we could retroactive his grants back to 2010. On the other hand, I have another client, a young girl with autism, despite her disability tax credit was approved back in 2006, since the RDSP was just launched back in 2008, we could only retroactive the matching grants back to 2008.
In the past number of years, I encouraged many families, if they have savings which are meant to build up their long-term savings, they should consider allocating them into the RDSP. This way, they could enjoy receiving the matching grants with their RDSP accounts. Every year, even including any carried forwarded matching grants from the earlier years, the maximum amount of CDSGs the government would give out is $10,500. Many of my clients did receive this amount in the past few years. However, it seems that quite a number of them has already caught up with all the carried forwarded grants. This is why some of them are entitled to only $3,500 in 2017, which is the maximum amount of grants for any individual year.
Hey, I hope this would give you a better insight about the RDSP. If you find it confusing since there are a number of financial jargon, don’t worry, send me a message and I’d be happy to go through this with you in person.
The amount of CDSGs and CDSBs depend on different factors such as family net income, amount of contributions, date of disability tax credit approval and others. Therefore, they could be different in each individual case. Above details could be subjected to change, and they are not guaranteed to be error-free. They are for general understanding only, and not meant to provide any financial advice. Please always consult a financial professional before making any decision.