When I started Mirella Muses my intention was to provide a variety of information to disabled individuals; I have to admit that I don’t know everything about the disabled community that I am a part of, that is why I make Mirella Muses available to individuals who are experts in certain areas.
A few months ago I had the pleasure of meeting with a gentleman that assists individuals with disabilities and their families apply for the Registered Disability Savings Plan. In an effort to Enlighten Engage and Empower; I would like to introduce you to Steven Williams, RDSP Specialist; the following is his blog post for this edition of Mirella Muses.
Why do we do this when the compensation is, what some would call meager it is simple. It must be done for everyone that has a Disability Tax Credit, especially for those that are on provincial Income Support so that their retirement can hopefully be more comfortable. Some have asked why I am so passionate about this program. My response is as follows:
I have really good friends that wondered what the RDSP was as their son has Autism and asked me to look into it further. I researched it for 3 months to make sure that I understood all of the ins and outs, the benefits and the ways around the shortcomings. In my research I found that there were only a few people across Canada that even knew what it was so I found that there was a gap in service for people that need the RDSP. Because of that gap, I decided to make it a personal mission of mine to make sure that everyone is aware of what is available and to help people open the RDSP to ensure that they have it. I look forward to everyday that I get to help open a RDSP for someone. It is my happy place. When I get to help people, it is not work, it is pure enjoyment.
If you qualify for the Disability Tax Credit (DTC), you must open an RDSP
There are qualifying criteria to opening a RDSP and they are:
- Live in Canada
- Have a Social Insurance Number (SIN)
- Qualify for the DTC
- Be under the age of 60. (49 to collect the free money that the government has)
- File your taxes from age 16 or 2006.
That is it; the biggest hurdle is the DTC. Get it done! If you think you qualify for it, try and try again if you don’t succeed the first or second time.
I have a client that is missing both of his legs. His parents tried when he was a kid but CRA turned them down for whatever reason. We got him to try again, and he ended up getting over $16,000 in tax refunds and now is collecting grants in his RSDP!
Canada Revenue Agency (CRA) tends to deny the DTC if they don’t understand the situation. In the example above, yes, he can walk with the use of prosthetics; however, he has limited times to be able to wear them and is confined to a wheelchair for the other times that he cannot wear the prosthetics. CRA denied him originally because the doctor wrote that he was able to walk with prosthetics, but did not explain that it was only for limited periods of time, so it was denied.
The other issue with getting the DTC is the doctors…some just don’t understand it and need to be educated. I have had some clients come back and say that their doctor would not sign the form as they would need to basically be a walking zombie for them to sign it. If this is the case, find another doctor.
Because the DTC is a tax credit, there is a lot of money involved in possible tax refunds. This is why the difficulty in getting it sometimes. In Alberta the tax credit is currently (2015) worth $2,589.85 for adults and $4,335.20 for kids. Qualifying for the DTC and being able to go back to 2006 to adjust the refunds can be as much as $23,033.86 for an adult or $38,243.93 for a child. Every province has a different value for their credits, so the value of the DTC refund will change depending on the province.
Now that the DTC is out of the way and approved, OPEN an RDSP as soon as possible!
The Registered Disability Savings Plan (RDSP) is for anyone under the age of 60. For those between 50 &60, it might not be the best option to save money, however, it is a great place to put an inheritance, etc. that would put you over the threshold amounts if you are on a provincial subsidy like AISH, ODSP.
For those under the age of 49, the RDSP is an absolute must have!
For those on provincial subsidies like AISH or ODSP, etc., no money needs to be put into the account. The government will put in $1,000/year in Canada Disability Savings Bonds, up to a maximum of $20,000.
For those that can put some money into their RDSP and whose income is under $90,000 (roughly as this number changes every year) they will be matched 3:1 for the first $500 and 2:1 for the next $1,000 deposited. So for $1,500, the government will put in $3,500 in Canada Disability Savings Grants!
If the income is over $90,000, then the government matches 1:1. $1,000 for every $1,000 deposited each year.
The maximum amount of grants is $70,000! And what is even better…we can go back to 2008 to collect grants and bonds that we missed out on for not opening the RDSP right away! That is a lot of money to collect!
CAUTION – if you are 46-49, you MUST get your RDSP open and funded (if you want the grants) NOW! As soon as you are in the year that you turn 50 there are no more grants or bonds. To be clear, if your birthday is December 15th and you turn 50 that day, it is too late to collect the government money.
Do not delay; get it opened as soon as possible! Where do you get it opened? The simple answer is give us a call 1.844.292.RDSP (7377) and we will arrange for someone to come and see you to get it done. No cost and it takes about an hour. (We get compensated from the financial institution that we work with, just like the banks would on any investment product like a RRSP or TFSA. There are charges on each mutual fund that the financial intuition take to get paid themselves and then a portion gets sent to our office basically as a thank you for bringing the client to them. This is the reason why not many do the RDSPs is due to the average compensation is about $6/month/client, this is why there is no cost to you.) Done. We even do the follow up if there is something that is not absolutely perfect with the paperwork. There are other places to go, however, learn from the experience of others that have tried…don’t do it. There are many components of the RDSP that need to be taken care of to ensure that you get the money that is entitled to you for your retirement. We offer all our RDSP clients that are on income support complimentary tax preparation.
Steven Williams, RDSP Specialist
1.844.292.7377 (toll free)
101, 11500 – 29 St SE
Calgary, AB T2Z3W9