RDSP Statement of Grant Entitlement

Soon you will receive your annual Registered Disability Savings Plan (RDSP) Statement of Grant Entitlement in the mail. For those of us too tired to calculate our annual contributions, the government does it for us. Of course this assume that you have an RDSP in the first place. For those of you who do not have an RDSP, I ask why not? Are you new to the world of autism or do you not like receiving free money from the government?

The RDSP letter will show what contribution you need to make to attract the maximum grant and/or bond for 2019.

I love to hate the government, but this really is a nice touch. They are all but begging to give you money.  

You could deposit more money than required to attract the maximum grant, but for most families I recommend limiting their contributions. There is a lifetime maximum contribution limit and once that is filled, there can be no further government grants.  

You can get more information about the RDSP from my website or RDSP.com.

The Demise of the Fitness and Arts Credit

In case you hadn’t noticed, the September 2017 BC Budget has put the final nail in the coffin for the Fitness and Arts Tax Credit.

The federal government had withdrawn these tax credits in 2016, but BC hung on with their provincial component. 2017 is now the last tax year that you will be able to claim the Fitness Tax Credit and the Arts Tax Credit (along with the $500 bonus for disabled kids).

Don’t get too excited about these credits.  If you somehow manage to claim the maximum amount ($500 plus the $500 disability bonus) you will only save $50 on your taxes.  Certainly worth doing, but hardly a windfall.

In reality these credits are only valuable to those who are back dating their tax credits for previous years.

Milburn’s Excellent Guide to Back Dating Disability Credits

So what are we talking about here?

Most of the federal tax credits that I describe on my website are based on the foundation of eligibility of the Disability Tax Credit (DTC). This is granted by the government after a successful filing of the T2201 form.

I will warn you that this is a long post.  If you are not interested in getting a substantial amount of money from the government, please stop reading now! On the other hand if you are like most humans and you like money, read on and I will provide you with some simple solutions.

Many people are unaware that the tax credits in question begin not on the day the DTC is granted, but rather the effective date, which may be many years in the past or ideally birth. Of course, as readers of my website, you obviously consulted my T2201 guide and ensured that birth was the effective date of the disability.  You did read the guide…right? If you were unaware of this, you can certainly re-apply for the DTC with updated information using the form T2201.

Once the DTC eligibility is in hand, many of the tax credits can be back dated to the effective date of the disability, but in most cases, you have to ask for it.

So, one by one, here are some of the tax credits that you can have back dated.  Please don’t dismiss this as too hard.  The process is very easy and can add up to a substantial amount of money. You can do it with only a couple of hours work and the payout can in some cases be worth tens of thousands of dollars of after tax money. Hey, I would love to get a job that pays $5,000 per hour.  Wouldn’t you?

The Disability Tax Credit

This is the only tax credit which can be back dated automatically on request.  The new T2201 form has an election (in other words…tick the box) to have the government automatically calculate the amount for you.  Why it is an election is beyond me.  Why wouldn’t someone want the the government to send them a pile of money?  The DTC is presently worth about $2,300. Multiply that by the years owing and that could turn into a lot of coin.

The Child Disability Benefit

Once you qualify for the DTC, the government will automatically calculate a back dated amount for the current and two previous tax years.  Prior to those years, you will have to make a request. To make this request is dead simple.  Write a letter to the Canada Revenue Agency (CRA) and ask that they back date this benefit to the effective date of the DTC.  It’s just that simple!

At over $2,700 per year for a low income household, this tax free benefit can add up dramatically.

Medical Expenses

All those years of tutoring or therapy can now be claimed.  Use the T1-ADJ form to make the request.  It’s a simple one page form with no calculations required. Make sure you include receipts and invoices to back this up. Refer to https://asdfunding.com/medical-expenses/ for more information.

Attendant Care Expenses

A sub-section of Medical Expenses which may include hiring a nanny for your child. Refer to https://asdfunding.com/medical-expenses/ for more information.

Fitness and Arts Tax Credit

Even though the federal government has phased out it’s program, you can still claim expenses from years past using the T1-ADJ form.  Remember that for each year of DTC eligibility, the government will add $500 to the total just because you have a disabled child. Receipts are required if you have not already submitted them. Refer to https://asdfunding.com/other-tax-credits/ for more information.

Child Care Expenses

You did hang on to your receipts from years past, right?  If so, you can now claim up to $10,000 per child eligible for the DTC. Again the T1-ADJ form is the one to use. Refer to https://asdfunding.com/childcare/ for more information.

Canada Caregiver Amount

The Canada Caregiver Amount (which now incorporates the Family Caregiver Amount) can be back dated to 2012 (the inception of the credit) or the effective date of the DTC, whichever is later.  No receipts are required and again the T1-ADJ form is used. Refer to https://asdfunding.com/other-tax-credits/ for more information.

Home Buyers Amount

Normally this is for first time home buyers, but if you purchased a home for the benefit of someone who qualifies for the DTC, then you may be eligible for this $5,000 tax credit. The purchase must be made to allow this person to live in a home that is more accessible or better suited to their needs. Once again, use the T1-ADJ form. Refer to https://asdfunding.com/other-tax-credits/ for more information

Home Accessibility Tax Credit

If you had home renovations in 2016 for the benefit of someone who qualifies for the DTC, you may claim up to $10,000 of expenses.  Refer to this post for more information.  Once again use the T1-ADJ.

Receipts

Receipts must be supplied to back up your claims for the following credits/deductions:

  • Medical Expenses
  • Attendant Care Expenses
  • Fitness Tax Credit
  • Arts Tax Credit
  • Home Accessibility Tax Credit
  • Home Buyers Amount
  • Child Care Expenses

Normally when filing a tax return, you would not include receipts, but rather hold on to them in case CRA asks for them.  In this case as you are filing for past credits, you must include them in your letter.  Make sure that they are broken down by year and category.  It should go without saying, but if you don’t have the receipts, don’t claim the credit.

Registered Disability Savings Plan (RDSP)

OK, so this is a little bit different than the tax credits referred to above, but no less valuable. The RDSP grants and bonds from the government (read that as free money) can be back dated to the effective date of the DTC.  All you have to do, is open the RDSP.  The Disability Savings Bond (up to $1,000 per year) will automatically be back dated. To receive back dated Government Saving Grants, you will have to make appropriate contributions to the account.

That sounds like way too much work!

I agree! Two hours of work to receive thousands or even tens of thousands of dollars is completely unreasonable. Fortunately, Milburn has created an easier solution for you!

It turns out that you don’t actually have to use the form T1-ADJ.  You can just write a letter instead.  Too much work still?  No problem! I have created a template letter in docx format that you can download here and send to the CRA.  You’re welcome!

Anything Else?

For God’s sake don’t pay anyone to do this for you.  So called “Disability Agencies” will charge you an exorbitant amount to do what you can easily do yourself.  Don’t even call them for a quote, unless you enjoy being harassed to use their services.

What next?

Once you have completed all of the above, there are three very important steps that you must do:

  1. Firstly, congratulate yourself for being so clever.
  2. Secondly, go out and celebrate your good fortune.
  3. Thirdly, post your experience on whatever parent message board you are using.  Let other parents know how valuable this is and encourage them to do the same.

Want a free $150?

Do you have an Registered Disability Savings Plan (RDSP) for your child? If not, why not? The RDSP is the most generous saving plan for your child’s future.  The federal government is itching to give you free money for your account.  The savvy parents know all about the matching grants and the bonds which can set you on the path to saving over a million dollars for your child’s financial future.

If that is not enough, you can get a free $150 thanks to the support of the Vancouver Foundation. It used to be that this free gift was only available to families with an income under $25,000. In order to encourage the uptake of the fabulous RDSP, they are now making this gift available to any child who:

  • Is under the age of 18,
  • Lives in B.C. and
  • Has an RDSP

For more information and the online application visit the Endowment 150 website.

If you have more than more child with an RDSP, each one is eligible for the Endowment $150 gift.

My RDSP Report Card

The Registered Disability Savings Plan (RDSP) for my child has performed well with a rate of return for 2016 of 5.5% and an average rate of return of 7.8% since 2012.

Why is this important and why should you care?

The RDSP is an incredibly valuable savings plan.  The federal government is ready to give you buckets of free money and you just have to be willing to accept it.

The financial institutions offering the RDSP unfortunately tend to limit the investment options to their “in-house” mutual funds and GICs, which have higher than average management fees.  I want to demonstrate that it is possible to invest wisely given the limited options available even if you have no investment experience.

How did I do it?

In 2012 I switched my child’s Registered Disability Savings Plan (RDSP) from BMO to TD Waterhouse. I was fed up with the limited investment options at BMO and their outrageous pricing.

I decided that my investment choices would follow the recommendations of the Canadian Couch Potato using TD e-Series funds. For this account I chose the balanced approach.

I love the simplicity of the plan.

  • I make a contribution once a year
  • The government will advise you by letter of the contribution that will attract the maximum grant and bond.
  • Wait for the government to add their contribution.
  • Re-balance the account to the original asset allocation.
  • That’s it.  You are done for the year.

To make the switch refer to my post RDSP – Change of Financial Institution

Disclaimer:  I am not affiliated with any financial institution. I believe you should get the best deal possible, but the prime objective should be to open an RDSP and start collecting free money from the government. If you are more comfortable at a different bank, then by all means go there.

Federal Budget 2016

I just finished reading through the 2016 Federal Budget and quite frankly they could have done better. I expected a little something for our disabled kids and unfortunately there is nothing positive.

What did we get? Nothing! In fact the government is actually reducing some of the benefits for our kids.

The Fitness Tax Credit and Arts Tax Credit will be cut in half for 2016 and eliminated for future years. Where this really hurts our kids is that we have been able to add $500 to the total as long as we spent $100. This was in recognition of the fact that our kids have high barriers to sports and arts program and frequently need supervision or training to participate. Now our kids are just like the others (as if!).

I’m disappointed with our new Prime Minister. Yes, the previous government definitely had its problems, but at least it was friendly towards persons with disabilities. Some of the enhancements on their watch included:

  • The Registered Disability Saving Plan (RDSP)
  • The Family Caregiver Amount
  • The Fitness Tax Credit with enhancements for disabilities
  • The Arts Tax Credit with enhancements for disabilities

I expected better from this government. Do they not care about the most vulnerable people in our society?

Are you annoyed? Let your local Federal Member of Parliament know about it.

Beyond that, Medicare for Autism Now (MFAN) has an initiative calling for ABA treatment to be universally accessible and covered under Medicare. This is a time sensitive issue and if you want your voice heard, go to their website and see how you can participate.

 

My RDSP Report Card

In 2012 I switched my child’s Registered Disability Savings Plan (RDSP) from BMO to TD Waterhouse. I was fed up with the limited investment options at BMO and their outrageous pricing.

I decided that my investment choices would follow the recommendations of the Canadian Couch Potato using TD e-Series funds. For this account I chose the balanced approach.

How have things worked out so far?  Well, I’m pleased to say that the account has done very well with a rate of return for 2015 of 6.1% and an overall average annual return of 9%.

I love the simplicity of the plan.

  • I make a contribution once a year
  • The government will advise you by letter of the contribution that will attract the maximum grant and bond.
  • Wait for the government to add their contribution.
  • Re-balance the account to the original asset allocation.
  • That’s it.  You are done for the year.

To make the switch refer to my post RDSP – Change of Financial Institution

Disclaimer:  I am not affiliated with any financial institution. I believe you should get the best deal possible, but the prime objective should be to open an RDSP and start collecting free money from the government. If you are more comfortable at a different bank, then by all means go there.