Community Legal Information Association of Prince Edward Island

Deadline for Disability Grants is December 31st

In 2008, the Government of Canada introduced the Registered Disability Savings Plan, a savings program for children and adults (under 60 years old) with disabilities who are entitled to the disability amount for income tax purposes.   

The amount of the grant depends on family income.  Up to the year that a disabled child turns age 18, family income is the income used to determine the parent’s Canada Child Tax Benefit.  For adults, it is combined income of a person and their spouse. 

There are two parts to the grants.  For people with a family income below $21,816, an annual grant of $1,000 can be received without making any deposits.  All you need to do is open an account and apply.  Some portion of this grant, called the Canada Disability Savings Bond, will be received until income reaches $38,832. 

The second part is called the Canada Disability Savings Grant.  For a family income up to $77,664, if someone deposits a total of $500 to a plan, the government provides $1,500; if you deposit $1,500, they will give you $3,500. 

If you add the two components together, and if your income is $21,816 or less, you could receive $4,500 in grants each and every year if you make a deposit of $1,500.  Families with higher incomes are also eligible for grants.  People with disabilities who are 49 to 59 years old can open a plan for the tax benefits, but are not eligible for grants.

The plan can be started by anyone, but a person with a disability can only have one plan and the proceeds from the plan can only be paid out to them or their guardian.  The money grows tax free while it is in the plan.  There are special rules on when and how the savings can be taken out of the plan, what happens if the person dies and other issues that your financial institution or financial planner can explain to you.   

The Prince Edward Island government has announced that it will not consider the Registered Disability Savings Plan assets when deciding a person’s eligibility for social programs such as social assistance, disability support services, child care subsidies, social housing, pharmacy programs and children’s dental programs.   

Any withdrawal from a Plan will be exempt as long as the total income is not higher than the low-income level defined by the National Council of Welfare.  For 2008, the low income cutoff for PEI would be in the range from $15,000 to $19,000 for a single person (before taxes). 

Further information is available from the PEI Council of People with Disabilities, or you can visit the Canada Revenue Agency or Human Resources and Skills Development Canada websites for further information (http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rdsp-reei/  and http://www.hrsdc.gc.ca/eng/disability_issues/disability_savings/cdsb.shtml). 

The important thing is to act now before December 31.  Remember, anyone can open the plan and anyone can make a deposit on behalf of the disabled person.

For more information, please contact: 

Blair Corkum is a Board Member of the Community Legal Information Association, and an hourly fee-based financial advisor with Corkum & Associates, Chartered Accountants and Financial Advisors in Charlottetown.  For information, contact Blair Corkum, FDS, CLU, RHU, CFP, R.F.P., CA  Telephone – 902-393-1248 (Cell)Email – blair.corkum@pei.aibn.com

 or

Marcia Carroll, Executive Director, PEI Council of People with Disabilities Telephone – 902-892-9149, ext 222