Will RDSP make me lose out other government benefits?
This is one of the common concerns I got from most families with special needs. For income-tested federal government programs such as Canada Pension Plan (CPP), The Goods and Service Tax Benefit (GST Benefit), RDSP payments do not have any impact on them. Even when the disabled person retires and would like to obtain the Old Age Security (OAS) or the Guaranteed Income Supplement (GIS), payments from the RDSP will not affect them. When completing your tax return, the RDSP income is entered on the line 125, box 131 of your T4A slips. This section is particularly for the RDSP payment, which will be recorded separately among other incomes.
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Will RDSP affects the ODSP benefit?
ODSP stands for the Ontario Disability Support Program. Their income support program is mainly to help out people with disabilities who are in financial need to pay for living expenses such as food and housing. There are limits to the amount of assets that a disabled person could have. Disabled person must not have asset over $5,000. Certain assets are exempt from this rule.
Fortunately, assets within the RDSP are one of the exemptions. Even when one has more than $5,000 within their RDSP, it will not affect their eligibility to qualify for the ODSP. Once again, the RDSP payment are exempt income. However, when the funding leaves the RDSP account, depending on the usage of the money, the withdrawal portion might no longer be counted as part of the exempt asset. If the withdrawal results in an accumulation of non-exempt assets of over $5000, this may possibly create impact on the ODSP benefit. That being said, it is extremely important to understand the consequences of different scenarios when planning for your RDSP.
(Note: For full details on ODSP, please refer to: http://www.mcss.gov.on.ca/en/mcss/programs/social/odsp/income_support/assets.aspx)