One of the key features of the Registered Disability Savings Plan (RDSP) is the Canada Disability Savings Grants (CDSG). This is a matching grant that truly enhances the account balance.
After all, it’s hard to find a better incentive to contribute elsewhere when the matching rate could range from 100% to 300%. (Though, it depends on family income and contribution amount.)
But some families told me that they did not receive the matching grants. So I would like to share some scenarios that I’ve come across.
1) Contribution amount
The most obvious reason is there is no contribution made to the RDSP. Keep in mind that this is a matching grant. So there needs to be a contribution for the Government of Canada to “match” with.
Another reason is that the beneficiary already received the maximum amount of grants. Assume there isn’t any carried forward CDSG from previous years. Then the maximum annual grant entitlement would be:
- $3,500 (family income in the first threshold)
- $1,000 (family income in the second threshold)
So if the annual grant limit is already received, the beneficiary would need to wait until the following year to receive any additional grant. (Assume they still qualify.)
Also, the lifetime maximum matching per beneficiary is up to $70,000. Once all is received, no more grants will be deposited.
2) Over the age limit
The Canada Disability Savings Grant is only payable until the end of the year the beneficiary reaches age 49.
I received quite a number of emails from people over that age. Their Disability Tax Credit has been approved all along, but they already passed the age limit. They want to know whether the matching grants can be backdated.
Unfortunately, although they can still contribute to the RDSP before age 60, the Government of Canada would no longer provide any matching grant.
Therefore, if you are approaching age 49 soon, you should seriously plan for the RDSP contribution before it’s too late.
3) Disability Tax Credit expires
This is the most common situation I’ve come across. Remember that not everyone has their Disability Tax Credit (DTC) approved on a permanent basis. Many families I’ve talked to need to renew it every 5 or 10 years.
If you refer to the “Notice of Determination,” (the letter the CRA sent you when approving the DTC), it would state the specific years that the beneficiary is eligible.
If you are unsure, you can log in to the CRA My Account or call 1-800-959-8281 to verify.
But suppose your DTC really expired, you have to go through the application again, which is bringing the T2201 form to the medical practitioner, then submitting it to the CRA.
Forgot about the steps? No problem. Here’s another post on applying for the Disability Tax Credit.
4) Beneficiary reaches the age of majority
This is another common one to miss. I work with many families with disabled children. When we first set up the RDSP, the child was still a minor.
However, once they reached age 18, the Government of Canada required the RDSP account holder and the beneficiary (which is the adult child) to sign the Canada Disability Savings Grants and Bonds application.
So if you already have an RDSP account, you may want to put a reminder about it when the beneficiary turns age 18. A good RDSP administrator usually would notify the families by the time. Well, at least the one I’ve been using for my clients is doing a pretty good job in this area.
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