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Posted by: admin | February 2nd, 2009 | Posted in: National
Another question that has been coming up frequently is around applying for the Disability Tax Credit. The approximate time it takes to process the DTC application is around 6-8 weeks (approximate), and this has many people wondering whether they can set up an RDSP before they apply for and/or receive the DTC.
The good news is that you will be allowed to set up an RDSP before you have the DTC designation, as long as you are approved for the DTC in the same year you set up an RDSP.
The Income Tax Act states that you must be eligible for the DTC in the taxation year for which the plan is opened, and does not state that you must be DTC eligible before you open an RDSP. This is an important distinction as many people will be worrying as to whether they can open an RDSP before the March 2nd deadline to receive 2008 Grant and Bonds.
This being said, you will also want to consider the implications of setting up an RDSP before you are approved to receive the Disability Tax Credit. If you were to apply for the DTC after having set up an RDSP, and you were deemed ineligible to receive the credit, the plan would not be certified and and any income generated in the plan would be considered income for that year.
So, if you can, make sure to apply for the DTC and receive confirmation of your certification before setting up an RDSP. If this is not possible, it is important to be aware that you can still set up an RDSP, but that you must apply and receive the DTC in the same year.