My 2019 RDSP Report Card

Last year, my son’s Registered Disability Savings Plan (RDSP) had a rate of return of 14.4%.

Is that a fluke?

No, not really. In fact it’s in line with the industry benchmark. My portfolio is based on the Canadian Couch Potato TD e-Series model portfolio . Last year, the model portfolio returned 14.8%.

It’s important to look at the long term picture. We opened the RDSP in 2013. The rate of return from then to the end of 2019 is 7.2%.

And we care because……?

I have talked with too many parents who think investing in an RDSP is complicated and a professional is needed. Nothing could be further from the truth. Anyone can manage RDSP investments without paying for a financial advisor or having any investment knowledge. All you have to do is setup a low cost portfolio (such as the one linked above), add money every year, let the government add the grants and bonds and in the long run, you will be well ahead of those who pay too much for financial advice.

Distributed Learning – Take 2

By far the most popular article on this website was a guest post by Vicki Parnell about Distributed Learning.

The comments and questions have continued over the years and Vicki has graciously answered every one. It’s now time for a short update from Vicki:

Update, February 2020:

The response to this article has been astonishing – almost 7 years later, I continue to receive emails from parents who have found my guest blog and have questions about DL learning. I’m so glad that other parents have been able to find a starting point for exploring school options they may not have known about in the past.

My own children have now finished their public school educations. One graduated from EBUS and benefited from an additional transition year there; the other moved back into the bricks-and-mortar school system (where he received excellent support from his high school’s resource teaching staff). He graduated last year.

Because I no longer have current experience with the DL system, if you have questions about this topic I would encourage you to join Facebook, where there are a number of active communities of parents who are involved in the DL and home learning experience. For example, this group: https://www.facebook.com/groups/385597354924709/

 “BC Parents and Service Providers of Special Needs DL and Homeschoolers” is very active and has almost 2500 members on the date I’m writing this update. There you can talk to families whose knowledge of the DL system is much more up to date than mine! 

Some of the information in my original blog is out of date (not surprising as it is now 7 years since I collected the information).  Keep in mind that the best source of information about your DL options is always the DLs themselves!

Combine Your Child Care Expenses

Did you know you may combine all the allowable child care expenses for your family and use them for only one child?

Neither did I! I cannot believe that in all the years of giving tax advice, I did not know this.

Let’s walk through an example:

Your family has 3 children: Robert 15, Adrian 13 and Deborah age 11. Deborah also qualifies for the Disability Tax Credit. The family limit for Child Care Expenses is $21,000 ($5,000 + $5,000 + $11,000). Visit TaxTips.ca for a detailed breakdown of what each child may claim.

Robert and Adrian hang with friends after school and do not need child care. Deborah has very high needs and must be supervised at all times. In this case, the family may claim up to $21,000 annually for Deborah’s child care.

Child Care Expenses are a tax deduction rather than a tax credit, so this is potentially more valuable to the family in question. Please read my page Child Care Expenses for more information.

Many thanks to Jamie Golombek of the Financial Post for bringing this to our attention.

Claim Private School Tuition as a Medical Expense

Did you know that school tuition may be claimed as a medical expense?

If your child qualifies for the Disability Tax Credit because of a mental or physical impairment and you need the equipment, facilities, or staff specially provided by that place for persons with the same type of impairments, you may claim the entire amount as a medical expense.

If your child does not qualify for the Disability Tax Credit, all is not lost. An appropriately qualified person may certify in writing the school is necessary for the reasons listed in the previous paragraph. The appropriately qualified person may be a medical practitioner, principal of the school or the head of the institution or other place.

Save Those Summer Camp Receipts!

Summer Camps receipts may be used for the Child Care tax deduction so hang on to them!

Refresh my memory.  What is the Child Care Tax Deduction?

If you pay someone to care for your child so you can earn an income or go to school, you may be able to deduct these costs from your total income. This is often more valuable than a simple tax credit.  For more information refer to my page Child Care Expenses.

As a reminder, the lower income spouse may claim up to $11,000 per child if they qualify for the Disability Tax Credit (DTC). In addition, the normal age limit of 16 does not apply assuming the child is dependent on you or your spouse.

What summer camp receipts are eligible?

Day camps and day sports school may be claimed in their entirety towards your Child Care limit.  Overnight camps on the other hand may only be claimed up to a maximum of $275 per week, if your child qualifies for the DTC.

You may also claim caregivers providing child care services, day nursery and day child care centers.

Anything else?

Remember if someone else pays the bills (i.e. the Autism Funds Unit) you cannot claim it as an expense.

Ontario – How Bad Is It?

I dare you to read the following article and not get mad.

https://medium.com/@MikePMoffatt/one-dads-experience-raising-two-wonderful-children-on-the-spectrum-c92babddcc96

This article was written about an upper middle class family. Imagine a single parent household with two or more kids on the autism spectrum.

File A Tax Return For Your Teenager

Your teenager earns nothing so logically you do not need to file a tax return. Right? Not so fast.

We discussed in previous posts why the Registered Disability Savings Plan (RDSP) is the best way to save for your child’s future. The key element to the plan is the government grants and bonds (free money!) which is added to the account. The amount added is dependent on the family income.

If the beneficiary of the RDSP is over the age of 18, the “family net income” used to calculate the government grants/bonds is that of the beneficiary and his/her spouse. The income that will determine the grant and bond is based on the income tax return from the second preceding year. (Example: Contribution made in 2019 – net income based on the 2017 tax year.)

In other words, to ensure your child receives the maximum entitled grant and bond, file a tax return when he/she turns 17 (even though the income may be low or even non-existent) so that the grant and bond will be based on his/her low income status.