New Disability Tax Credit Documents

Two new documents are available on my website today.

The first is an updated “T2201 Guide” which explains how to apply for the Disability Tax Credit for children with autism. There have been numerous changes over the past year including a new form, an online application for the physician and an online tool to guide you prior to your doctor’s appointment. If you need to apply (or re-apply) for the Disability Tax Credit for your child, this document is a must read.

The second is a brand-new guide to maximizing your refund after getting Disability Tax Credit (DTC) approval. There are many misunderstandings about what can be claimed and back dated following DTC approval. This document will guide you through the process in an easy straight forward manner. The Post T2201 Guide can be downloaded directly or from my files page.

Happy Reading!

My 2021 RDSP Report Card

For 2021, my Registered Disability Savings Plan (RDSP) has returned 11.8% and 8.5% over all years since I started tracking in 2013.

Once again, the account has done embarrassingly well. My intent is to demonstrate that anyone without the help of an advisor can easily achieve stellar results with very little effort.

The investments, which have not changed since I opened the account, are a balanced approach using the TD E-Funds and following the Canadian Couch Potato Portfolio.

The Future

The account has now grown large enough to consider simplifying the investments and lowering fees by switching to the ETF VBAL. The overall investment mix will remain about the same but the process will be easier by having a self-balancing, low fee investment product. More about that next time…

Apply Now For The DTC And Collect $600

The federal government has just introduced Bill C-20 which will give everyone who is eligible for the Disability Tax Credit (DTC) $600. This money is non-taxable and will be sent automatically to anyone who qualifies.

What if my Child does not qualify for the DTC?

You will have 60 days following royal assent (which should be coming very shortly) to apply for the DTC and receive the payment. The processing time for the DTC will likely be longer than 60 days but you only need to submit the application in time.

What if we are still waiting for the Provincial Autism Assessment?

The criteria to qualify for the federal DTC is not the same as qualifying for provincial benefits. Please read my guide Autism and the T2201 for more detailed information.

Are there any traps I should be aware of?

The T2201 will need to be signed by a qualified practitioner. I would not recommend your family doctor as it is a specialized form. Most doctors will not know how to correctly complete the form for a child with autism. Once again, please read my guide Autism and the T2201 for more information. Make your appointment now! Do not delay the process.

Do not mail in your application. Use the CRA My Account to submit your application and avoid postal delays.

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

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 for more information.

Attendant Care Expenses

A sub-section of Medical Expenses which may include hiring a nanny for your child. Refer to 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 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 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 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 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 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.

The Power Of The RDSP – Part 2

Susan is a lovely 2 year old who was diagnosed with Autism and is likely to need full time care for the rest her life. Susan’s parents both work and have a combined net income of $80,000 per year. They have provided well for her, but they don’t have any spare funds available to save for her financial future.

Susan’s grandparents want to step up and contribute to her future. They decide to put into their wills that Susan will receive the majority of their estate. They were quite disappointed to learn that putting money directly into the hands of Susan will trigger a clawback from the government, stopping all her disability payments until her assets are reduced to $5,000. Effectively Susan’s grandparents would be giving their estate to the government.

Susan’s parents suggest a better way. They will open an RDSP and the grandparents will contribute $1,500 per year for 20 years for a total contribution of $30,000.

Question: How much will Susan’s account be worth when she turns 50?


  1. $255,453
  2. $644,478 or
  3. $844,927?

Let’s do the math using the online RDSP Calculator

  • Susan’s will make three years worth of contributions in the first year. The government has already stipulated that Susan’s disability started at birth.
  • Each year from Susan’s birth, a RDSP contribution of $1,500 will attract a $3,500 grant from the government. That’s over $15,000 in her account in the first year of the plan.
  • When Susan becomes an adult, the government grants and bonds are calculated using her personal income and not that of her parents. She now becomes eligible for the $1,000 annual bond with no matching contribution.
  • Susan’s parents open an account with TD Waterhouse giving them much greater investment options than other institutions. They decide to invest using the Canadian Couch Potato’s portfolio and plan on a conservative rate of return of 5%.

So what will be the account balance when Susan turns 50?

Answer: $844,927

My question to you is: Why would a disabled child’s grandparents hand over their life savings to the government when they could have this kind of impact on their granddaughter’s future?

The Power Of The RDSP – Part 1

Joey is a 6 year old boy with autism. His parents applied for the Disability Tax Credit using the T2201 guide (pdf) available on this website. They were very careful with their application and the Canada Revenue Agency (CRA) agreed that Joey had been disabled from birth.

Joey’s parents are in a low income bracket with a taxable income of only $23,000. They worked hard to ensure Joey received the maximum benefit from the B.C. Autism Funding and took advantage of some tax breaks due to Joey’s disability. Having taken care of their son as best they were able, they now became concerned for his financial future after they died. Unfortunately they had no available funds for a Registered Disability Savings Plan (RDSP), but they opened an account anyway.

Question: How much would Joey’s RDSP be worth when he is age 50 if no one made a single contribution to his account?

Choose from:

  1. $45,587
  2. $83,386 or
  3. $147,296

Let’s go through the math using the online RDSP Calculator.

  • The family income is below $25,356 so the government will contribute a $1,000 bond every year with no matching contribution
  • Backdated bonds will be automatically deposited back to 2008 when the RDSP was introduced or when Joey ‘s disability started (according to the CRA)
  • Joey’s parents invest the funds in simple low cost mutual funds using guidance from the Canadian Couch Potato
  • They conservatively estimate that the rate of return will average 5%

So what will be the account balance when Joey turns 50?

Answer: $147,296

Not only is that a lot of money, but the proceeds are exempt from clawing back any disability benefits (at least in B.C.) that Joey will be receiving as an adult.

My question to you is: If you haven’t opened an RDSP, what is stopping you?

Family Caregiver Amount Update

The Family Caregiver Amount (FCA) is a tax credit for families caring for a child with mental or physical impairments. The credit for the 2014 tax year is $2,058 which equates to a tax savings of $308.

In previous tax years it was a requirement to obtain a doctor’s letter to confirm that the child is dependent on others for an indefinite duration. This is no longer a requirement if the child has an approved T2201 Disability Tax Credit Certificate from the Canada Revenue Agency for the specified time.

This is a most welcome and obvious solution.

For more detail refer to my page Other Tax Credits

Private School As A Medical Expense

Did you know that you may be able to claim the expenses for private school as a medical expense? If the school is required due to a physical or mental impairment, you may apply to the Canada Revenue Agency (CRA) to have the fees considered a medical expense.

Big Cajun Man of the Canadian Personal Finance Blog has a detailed article on how you may be able to claim these expenses.

I have copied his template letter to the CRA and added it to my files page.

My RDSP Report Card

In 2012 I switched my child’s 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.

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 2014 of 10.34%.  I don’t think this will repeated every year, but it’s a very good start.

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 if you are more comfortable at a different bank, then by all means go there.

Why Your Autistic Teenager Should File A Tax Return

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 dependant on the family income.

If the beneficiary of the RDSP is over the age of 18 then 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 2009 – net income based on the taxable year of 2007.)

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

What To Do With An Unwanted RESP

Some of us opened an RESP for our child only to later realize they will not be attending post secondary education. It’s tempting to simply collapse the RESP but there is now a better option.

For the last couple of years an option to rollover some of the funds from an RESP to an RDSP has existed. To do this one of the following conditions must be met:

  • The individual has a severe and prolonged condition which will prevent him/her from attending post secondary education
  • The RESP itself must be at least 10 years old and the beneficiaries at least 21 years and not pursuing further education or
  • The RESP itself must have been in existence for 35 years

Once one of the above conditions has been met, the rollover will happen as follows:

  • The contributions will be returned to the subscriber (i.e. the parent) on a tax free basis
  • The savings bonds and grants will be returned to the government
  • The investment income will be transferred to the RDSP
  • The transfer will count toward the lifetime contribution limit of the RDSP
  • It will not attract a matching government grant
  • The funds will be taxable on withdrawal from the RDSP in the hands of the beneficiary

What does this mean for you?

  • If you have set up an RESP don’t panic as you are not going to lose your money
  • Don’t be in a rush to collapse the RESP as you may yet find a way to use the account.

RDSP with TD Waterhouse

Thanks to the Big Cajun Man at the Canadian Personal Finance Blog for the latest update regarding TD Waterhouse.

Holders of an RDSP account can now trade online using WebBroker . Previously we had to conduct all trades over the phone, so this is a big step forward. The complete article can be found here.

For those of you who don’t have other TD accounts, you will still have to deliver a cheque for your RDSP contributions.  For more information about how I handled my child’s RDSP account visit RDSP – Change of Financial Institution.

T2201 Guide Version 2 Released

Those of you about to file a T2201 (Disability Tax Credit Certificate) for the first time would be well advised to review the T2201 Guide.  It outlines some of the errors that parents and their doctors make as well as answering many frequently asked questions.

Version 2 includes a sample “Impact Statement” written by one of our keen parents. It provides guidance for doctors who are struggling for words or possibly a complete statement for the medical professional. It should not be copied, but it provides a starting point for a parent who needs to describe their child’s disability.

The pdf can be downloaded from my Files page.

Rollover Funds From RRSP to RDSP

A rollover of funds from a Registered Retirement Savings Plan (RRSP) to a Registered Disability Savings Plan (RDSP) is another option for estate planning although there are a few limitations that you need to be aware of.

A rollover is an indirect tax-deferred transfer of certain amounts to an RDSP beneficiary’s plan. Rollover amounts must originate from an RRSP, Registered Retirement Income Fund, or Registered Pension Plan of an RDSP beneficiary’s parent or grandparent. Such amounts may only be rolled over if the RDSP beneficiary was financially dependent upon the parent or grandparent at the time of the parent or grandparent’s death because of a mental or physical infirmity.

Here are some reasons why it makes sense:

  • Funds from an RRSP willed directly into the hands of the beneficiary are first subject to full taxation before being passed on.
  • If the funds are under the direct control of the beneficiary, it will trigger a Persons with Disability (PWD) clawback effectively nullifying the gift.
  • A rollover to an RDSP is much easier to administer than a discretionary trust.
  • The rollover funds are transferred without triggering taxation. Inside the RDSP, the funds continue to accumulate tax free until the funds are withdrawn at which time they are subject to taxation in the hands of the beneficiary.
  • In the case of a grandparent this can be an effective way to pass on funds in a tax efficient manner without affecting the individual’s Disability Assistance payments.

There are a few limitations that you need to be aware of:

  • A rollover is subject to the maximum $200,000 lifetime contribution limit to an RDSP
  • A rollover will not attract a Canada Disability Savings Grant.
  • Once the plan has received the maximum contribution limit, no further Canada Savings Grants are possible.

Estate Planning – The Worst Thing A Grandparent Can Do

Grandparents and other extended family members often try to help their disabled grandkids by leaving them money in their wills. As noble as this is, it may be the worst possible thing to do. As I have mentioned in previous posts, Persons with Disability (PWD) benefits for a disabled adult are clawed back until assets (with some exclusions) are reduced to $5,000. The net result is that the child will have received nothing. This is not a satisfactory situation to say the least. The good news is that with a little planning we can achieve a very different result.

Some solutions include:

  • Grandparents leaving the money directly to the child’s parents so they can distribute the money in a fashion which will not trigger the PWD claw back.
  • The money can be willed to contribute directly to a Registered Disability Savings Plan (RDSP) for the child. Distributions from an RDSP are exempt from the PWD claw back. One downside is that there is a lifetime maximum contribution limit of $200,000. Additionally, if all the money is contributed in a lump sum, the plan will only receive the matching government grants for that year.
  • If the grandparents’ estate has a considerable amount of money for the child, perhaps a trust is in order. To set up a trust (which is exempt from the PWD claw back if constructed properly) a lawyer specializing in trusts should be consulted. A starting point would be to contact PLAN to learn about wills and trusts and get their recommendation for a lawyer.

My personal recommendation (especially for those of us with modest incomes) is for the grandparents to contribute to the child’s RDSP on a yearly basis while they are still alive. Doing this will ensure that:

  •     The government grants and bonds are maximized
  •     The money is passed to the child in a tax efficient manner
  •     The proceeds of the RDSP are exempt from the PWD clawback
  •     It ensures that the money will be used for the benefit of the child and no one else
  •     Unlike a trust, an RDSP is very easy to set up and manage. Please refer to for more detailed information.

Below I have given an example of how it might work for a Grandparent contributing to an RDSP.

  •     Assuming the family income is below approximately $85,000 and above $42,000
  •     The child is 4 years when contributions commence
  •     The Grandparents contribute $1,500 per year for 20 years for a total contribution of $30,000
  •     The funds are invested in a conservative manner earning 5.5% per year
  •     The net result is that when the child is 55 years old the account will be worth approximately $1,000,000!

That sounds like a much better result than having the government claw back the entire amount. If your child’s grandparents want to contribute to his/her future in a meaningful way you need to have this talk with them (you might also send them a link to this post).

Save A Million Bucks (without really trying)

The Registered Disability Savings Plan (RDSP) is more than just a long term savings plan. It should also be a key element of your estate planning.

In case you are dismissing the RDSP as irrelevant, please consider two samples scenarios.

Firstly, for a low income family opening an RDSP when their child is 4 years old and never contributing a single penny, the account could be worth $239,000 by the time their child is 60 years old!

Next, consider a middle income family ($37,000 to $85,000) contributing $1,500 per year for 20 years. By the time the individual is 60 years old, the account could be worth $1,300,000!

We are talking about serious money here. The website has an interesting calculator that you can use to see how your contributions and the government funds accumulate tax free to a sizable amount. It’s worth putting in your personal numbers to see what an RDSP can do for your child. Remember the earlier you start, the more time you have for the gains to accumulate.

It’s important to remember that the RDSP is a long term savings plan and will do very little for your short terms needs. There is a rule called the 10 year hold-back. It was slightly modified last year, but the basic idea is that if you take money out of the account within 10 years of receiving a grant or bond, the government will claw their contributions back. Just think of the plan as a long term investment for your child and you will be fine.

Grant Bond carry forward

When the RDSP was first introduced, the matching government grants were only given for contributions in that calendar year. That meant that if you missed the Dec 31 deadline, you were out of luck for that year.

Things have now changed. Since 2011, you are now allowed to carry forward unused grant and bond entitlements to future years. The carry forward period can only start after 2007 and lasts for 10 years. Considering the age of your child and the number of years since the disability commenced this can be a significant amount of money. The government will contribute up to $3,500 per year in grants and up to $1,000 in bonds. Refer to my page RDSP for more details.

For those of you who haven’t yet started an RDSP, there is a lot of money on the table and now is the perfect time to set up the account and collect all the government grants and bonds back-dated to 2008. Remember that the child must qualify for the Disability Tax Credit in order to open an RDSP.

A word of caution; don’t use this as an excuse to put off contributions to the RDSP. Firstly, you never know when or if the government might change the rules and secondly, the earlier you start, the more time you have to compound your returns.

If you have not yet educated yourself about the RDSP, please refer to my page RDSP or go to for a more detailed look at the plan.


The Single Best Investment for your Child

This is the first in a series of posts about the Registered Disability Savings Plan (RDSP).

If you are going to do only one thing for your child’s financial future, setting up an RDSP is it. This easy to setup account invests free government money for his/her future and protects future benefits in a way no other investment can.

Surprisingly the uptake on RDSP is abysmal. Only 14% of those eligible have an RDSP. Why do parents not take the first step to assure the financial future for their child?

I have heard every possible excuse for not starting up an RDSP:

  • It’s too hard (Wrong! The paperwork may be lengthy, but grab a coffee and let the financial institution fill it out while you chill. Call ahead and book an appointment with an RDSP specialist)
  • It curtails future benefits that my child might receive (Wrong! The BC government has exempted disbursements from the RDSP from clawing back future benefits)
  • The investment options are very limited (Partly true, which is why I recommend TD Waterhouse for your account)
  • It doesn’t amount to that much money (Wrong! Properly structured the account can amount to well over a million dollars as your child approaches middle age)
  • It doesn’t provide the funding I need now (True, but why should that stop you from planning your child’s financial future?)

The Basics

The RDSP is similar to a Registered Education Savings Plan (RESP). A person contributes money to this registered plan, the government adds “free money” and it all accumulates tax free. There is something for everyone here. Families with modest incomes will qualify for a savings bond with no matching contributions. Families with higher incomes will enjoy matching grants within certain limits.

BC has exempted RDSP payouts from clawing back Persons with Disabilities (PWD) benefits further increasing the desirability of this plan.

There should be no excuse not to have a plan set up. Depending on family income the government will add funds through one or both of the following programs:

Canada Disability Savings Grant

When annual family net income is equal to or less than $87,123 the grant will contribute:

  •    $3 for every $1 contributed on the first $500.
  •    $2 for every $1 contributed on the next $1,000.

When annual net income is over $87,123, the grant will contribute:

  •    $1 for every $1 contributed up to $1,000.

The Grant can be received up to a maximum of $70,000 over a person’s lifetime and only until the beneficiary turns 50 years of age.

Canada Disability Savings Bond

When annual net income is $25,584 or less, the Canada Disability Savings Bond will provide $1,000 per year without any personal contribution. The Bond is pro-rated if your income is between $25,584 and $43,953.

The Bond was created to make the RDSP accessible to persons with disabilities whose family and friends are not in a position to make contributions. The Bond can be received up to a maximum of $20,000 over a person’s lifetime and only until the beneficiary turns 50 years of age.

Would you like a $150 gift to kickstart your RDSP?

If you are in receipt of provincial income assistance, you may be eligible for a one time gift of $150. Refer to Endowment 150 for more information.

Which Financial Institution should I use?

TD Waterhouse. If you want to know why, see my previous post RDSP – Change of Financial Institution

GST/HST Relief – Budget 2014

Our pleas and lobbying efforts have now paid off.  Behaviour Consultant services will finally be exempt from GST/HST according to the budget release notes.

Economic Action Plan 2014 proposes to expand health-related tax relief under the GST/HST and income tax systems to better reflect the health care needs of Canadians.

The Government is committed to ensuring that the tax system reflects the evolving nature of the health care system and the health care needs of Canadians. Economic Action Plan 2014 proposes measures that will expand health-related tax relief by:

  • Providing further tax recognition for costs associated with eligible specially designed medical therapies and training by:

    • Expanding the current GST/HST exemption for training that is specially designed to help individuals cope with a disorder or disability to also exempt services of designing such training, such as developing a training plan.
    • Including amounts paid for the design of an individualized therapy plan as an eligible expense for income tax purposes under the Medical Expense Tax Credit.

The exemption will be effective after budget day, but you can expect there to be a few delays as the government publishes a GST update information sheet and Behaviour Consultants take time to confer with their accountants.

As more information becomes available, I will publish further updates.

Finally, one small win for us!



TD1 – Reduce Your Income Tax Deductions

What is a TD1?

This form will assist your employer to determine the amount of tax to withhold from your pay. This form is mandatory for new employees and should be updated when there is a change in your circumstances.  As the parent of a disabled child qualifying for the Disability Tax Credit you will elect to have these tax credits reduce your regular income tax withheld.  The alternative is to effectively give an interest free loan to the government as you wait to have these amounts refunded after you file your income tax return.

Where do I get these forms?

They will either be supplied by your employer or you can download them at TD1 Forms for 2014

What should I claim?

Firstly under Line 2 you will claim $2,255 for each child and $2,058 for your infirm child. The latter refers to the Family Caregiver Amount that you will claim on your tax return.

On line 12 you will claim $7,766 for 2014. This is for the “Disability Amount Transferred from a Dependent”. You could claim the disability supplement but this will be reduced if you claim child care or attendant expenses.  Best to be safe and leave it at $7,766. Likewise on the provincial TD1BC form you would similarly claim $7,402 on Line 11.

Prepare Your Own Therapy Invoices And Save $$$

Who creates the invoices for the therapy provided for your child? The Behaviour Consultants (or agency) will generally submit an invoice on a monthly basis for the Autism Funds Unit (AFU) or direct payment from you. But what about your Behaviour Interventionists (BI’s)? You should take on the responsibility of making the monthly invoice. Why?

  • It gives you more control over the type of services rendered (more on that below)
  • If you leave it to your BI’s, they will get it wrong
  • You will be more aware of the hours that are being billed
  • It will reduce fraud
  • You need to closely track how funds are dispersed

I have my therapists complete a hand written time sheet which are collected at the month end and used to create the invoices that will be submitted to the AFU or held for tax purposes. I track the AFU funds on a spreadsheet or hand written table to ensure funds are available and set aside for that therapist. It sucks away team morale if the BI’s aren’t paid because you weren’t paying attention to how much was in the account.

You must pay particular attention to the “services rendered”. Firstly the AFU has specific terms they want used. Do you think they are going to pay for a particular day if the BI enters the service rendered as “Bike riding with little Johnny”? I think not! For a more detailed discussion of terms that should be used for the AFU invoice refer to the ACT Autism Manual for BC Chap 5.

After the AFU funds are used, you need to think about taxes. Services that can be claimed include:

  • Tutoring
  • Child Care
  • Attendant Care

Therapists who construct the invoices themselves have no awareness of your tax situation and will screw it up by entering services such as:

  • Overlaps
  • Team Meetings
  • Training
  • Travel
  • Materials expenses

All of the above services are ineligible for tax purposes and hence the need for you to control the invoices.

So how would this work for you? For starters, you may want to claim funds from the AFU to the $22,000 (or $6,000) limit. Once those funds are exhausted and both parents are working (and hence eligible to claim child care expenses) you will create invoices listing “Child Care” as the service provided. Remember you can claim up to $10,000 (assuming the child qualifies for the Disability Tax Credit). This is a tax deduction and will usually provide the best tax refund. After these limits are reached you can then assign the rest of the therapy as “Tutoring” which is a medical expense.

If you have a live in domestic helper, the same principles apply. Firstly use the $10,000 child care expenses and then apply the rest to “Attendant Care” which will be added to the medical expenses.

Are you starting to see why you should create your own invoices and receipts? It’s your money and no one better than yourself understands what you should be claiming. Remember that each invoice should be matched with a proper receipt with the required information.

Now you could ask your BI’s to make their own invoices using certain rules, but I guarantee they will screw it up. You will then expend twice the effort to correct their mistakes. It’s much easier to do it right the first time.

I have provided some examples in my Files page of invoices you can create. It can be hand written in table format (keep it neat!) or constructed using a spreadsheet (my personal favourite).

RDSP – Change of Financial Institution

As the readers of my site know, I am a big proponent of the Registered Disability Savings Plan (RDSP). It’s a generous savings plan for our disabled children. Depending on your income level and contribution, the government will add up to $4,500 per year to the account which accumulates tax free.

I have held my son’s account with the Bank of Montreal (BMO) since the RDSP was introduced. The staff at the bank have been friendly and the administration has been a piece of cake.

The problem is the investment choices at BMO (typical of most of the banks offering the RDSP) are severely limited. You could invest in:

  • A savings account (with minimal interest rates)
  • A BMO only GIC (with below market rates)
  • BMO mutual funds (with excessive management fees)

None of the above options appealed to me, so I made the move to transfer to TD Waterhouse. The options there are endless including:

  • Stocks
  • Bonds
  • GICs
  • Options and
  • A wide variety of mutual funds

To open and transfer the account, there was a mountain of paperwork. For the most part, I just sat there and let the staff do all the work and signed the documents at the end. The process however was very straightforward and the staff very helpful. 45 minutes later and we were done.

The transfer takes a few weeks to complete and you will receive a letter with your new account number. It then takes a couple of simple phone calls to set up your WebBroker passwords to view your account online. One of the quirks of this account is that you can’t buy or sell online. You must complete your trades over the phone. This however is easily done.

Personally I believe in simplicity when it comes to investing. I constructed a portfolio based on the advice of the Canadian Couch Potato using his Model Portfolio and the  TD “E” Class funds as shown below.

The cheapest index mutual funds in Canada are TD’s e-Series, but these are only available to investors who open an online account with TD Canada Trust, or through a TD Direct Investing discount brokerage account. The total annual cost of this portfolio is 0.44%:

Canadian equity 20% TD Canadian Index – e (TDB900)
US equity 20% TD US Index – e (TDB902)
International equity 20% TD International Index – e (TDB911)
Canadian bonds 40% TD Canadian Bond Index – e (TDB909)

The funds are no-load (i.e. there is no cost to buy or sell) and the only caveat is that you must hang onto the funds for at least 90 days to escape penalties. This is no problem for me as I intend to only re-balance the portfolio once a year after my contribution and the government grants have been deposited.

Autism and the T2201

I have received many questions over the years about the T2201 Disability Tax Credit Certificate, some obvious and others not so much.  For a parent new to autism, it can be an intimidating process.

I’ve put together a package with information that parents need to know before completing the T2201 form.  For those of you that don’t know, the T2201 form is how you apply for disability status with the federal government. Approval for the Disability Tax Credit (DTC) leads to many tax breaks for parents of disabled children.

The PDF file can be obtained from the link T2201 Guide or from the Files page.

It should be compared against the latest T2201 form which can be downloaded here.

Attendant Care

One of the most overlooked tax breaks for parents with children who qualify for the Disability Amount is Attendant Care.

Some examples of Attendant Care include:

  • Hiring a nanny to care for your child (full time or part time)
  • Paying a babysitter or child care worker
  • House cleaning services (Yes, it’s true! Check out 2007 Tax Court of Canada case, Zaffino v. the Queen)
  • Full or part time care in a school, institution, or other establishment (to claim these expenses, a medical practitioner must confirm the person’s need for the equipment, facilities, or personnel available in the establishment)
  • Transportation services
  • Maid service
  • Meal preparation
  • Care or supervision in a group home
  • Respite

Attendant Care is claimed as part of the Medical Expense Tax Credit. This means that you will get about 20% of your money back.

You may claim up to $10,000 and still receive the Disability Amount. Note that this is per paying individual. Each spouse may contribute the $10,000 for a total of $20,000. This amount may then be combined and claimed as a medical expense. To do this, each supporting individual must have receipts to back up their claim.

Claiming attendant care costs higher than $2,578 (for the 2012 tax year) will reduce the Disability Amount Supplement.

You may claim more than the $10,000 however this will reduce the Disability Amount. I do not recommend that you claim more than this amount unless the attendant care expenses go beyond $17,546 (for the 2012 tax year).

Tax Tip

Hire a relative to care for your disabled child. The individual must not be your spouse or common-law partner and must be at least 18 years of age. You also have to provide invoices with the individual’s SIN number.

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