Annual Income: This is the beneficiaries’ net adjusted income as defined by the Canada Revenue Agency which takes into account any credits and deductions received.
Assistance Holdback: Also known as the 10-year rule. The assistance holdback amount is the total amount of bond and grant paid into the RDSP within the last 10 year period, less any part of that amount that has been repaid to ESDC. See here for more information.
Beneficiary: the person eligible for the Disability Tax Credit/the person who owns the RDSP.
Canada Disability Savings Bond: The Canada Disability Savings Bond is a federal government contribution to the RDSP of up to $1,000 a year to a maximum of $20,000.
Canada Disability Savings Grant: The federal government contribution that is received when the beneficiary or others make contributions to an RDSP.
Compounded Income: Money invested accumulates interest which then continues to grow as more interested is accumulated.
Contributors: Parents, grandparents, other family, friends, associations, charities, foundations. Anyone authorized by the holder to contribute into the RDSP.
Disability Assistance Payment (DAP): A one-off lump sum payment from an RDSP.
Disability Tax Credit (Form T2201): A non-refundable tax credit used to reduce the income tax the beneficiary pays on their tax return. It can be claimed by anyone with a “severe and prolonged” disability and transferred to unpaid caregivers.
Exempt asset: An asset that will not impact the determination of eligibility for government benefits.
Fair Market Value (FMV): The FMV is the value of the RDSP. It includes personal contribution amounts, earnings and grant and bond contributions. The FMV is used to determine the amount that can be withdrawn from an RDSP.
Guaranteed Income Supplement: A benefit that provides additional money for seniors with a low-income who are also receiving the Old Age Security Benefit.
Grant: This is matching federal money that can be received if the beneficiary, family or friends contribute into the RDSP.
Holder of the RDSP: A person who is legally authorized to manage and make decisions regarding an RDSP. In some cases the holder and beneficiary will be the same person, while in other cases, the beneficiary and holder will be different people.
Income Tax Form T2201: Application form for the Disability Tax Credit.
Issuer (RDSP): A financial institution that offers the RDSP, e.g. banks, credit unions, brokers, asset management firms, etc.
Lifetime Disability Assistance Payment (LDAP): Regularly scheduled withdrawals from an RDSP based on a formula. These payments can start at any time, but must begin by the end of the year the beneficiary turns age 60. Once started, they continue until the formula ends the plan at age 83.
Old Age Security Program: This program provides income for seniors over the age of 65 who have lived in Canada for over 10 years.
Payments: Money withdrawn from RDSPs is called payments.
PGAP and non-PGAP: Primarily Government Assisted Plan (PGAP). An RDSP is a PGAP RDSP when the total of all government grant and bond payments made into a beneficiary’s RDSP is more than the total of all private contributions made to the RDSP. An RDSP where personal contributions exceed government contributions is known as a non-PGAP RDSP. These terms are important for knowing how much can be withdrawn from an RDSP.
Private Contributions: This is any money that is contributed into an RDSP by the individual, family or friends.
Specified Disability Savings Plan (SDSP): Special rules applied to an RDSP to allow for more flexible withdrawals from an RDSP when the beneficiary is diagnosed with shortened life expectancy.
Tax-free growth: The growth of money invested in a registered savings plan that will not be taxed. The new Tax Free Savings Plan is the best example. RDSPs do not have tax free growth.
Tax-deferred growth: The growth of money in a registered savings plan that will not be taxed until it leaves the plan. The growth is subject to tax when it is taken out of the plan. RDSPs are like this.