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What is Carry Forward? In 2010 the Canada Disability Savings Act was amended to allow people with disabilities and their families who had not opened an RDSP or may not contribute on a regular basis to Carry Forward unused grant and bond entitlements from the past 10 years, starting in 2008; the year the RDSP became available. The provision applies to all RDSPs regardless of when the plan is registered. To take advantage of this valuable provision, the beneficiary of an RDSP must be currently eligible to receive the grant and/or bond. The Carry Forward provision ends at the end of the calendar year the RDSP beneficiary turns age 49. The grant and bond entitlements for a given year are based on the RDSP beneficiary’s family income. The amount of the grant depends on how much is contributed to the RDSP and the matching rate. The matching rate for Carry Forward entitlements will be the same as the one that would have applied if the contribution had been made in the year in which the grant entitlement was earned. Grants and bonds will be paid on unused entitlements, up to an annual maximum of:
- $10,500 for grants
- $11,000 for bonds
When did the Carry Forward begin? The provision came into effect on January 1 2011. Any RDSP beneficiary who is currently eligible to receive the grant and bond can benefit up to the year that the beneficiary turns age 49.
Do I need to complete a special application to request the Carry Forward of a grant or bond? No, a special application is not required for the Carry Forward provision. The Grant and Bond entitlements will be calculated automatically. Grant and Bond entitlements for people with disabilities and their families will be calculated on their annual income tax return. Once a year, the holder of an RDSP will be provided with a statement that sets out the amount of grants that may be paid for particular years on the basis of future contributions.
What is the most a person can get in a grant and bond in any year?The maximum grant entitlement is $3,500 per year, with a lifetime limit of $70,000 and a maximum bond entitlement of $1,000 per year with a lifetime limit of $20,000. Under the Carry Forward provision, grants and bonds will be paid on unused entitlements, up to a maximum of $10,500 for grants and $11,000 for bonds. Any Carry Forward entitlement “room” remaining from contributions in previous years, where the grant and bond were not paid out in full, will be calculated, as appropriate, and available for contributions made in the current year and beyond.
How much should I contribute to get the most grant in 2012? If a beneficiary is considered in the low income category for all years and no contributions were made, the contribution that produces the largest grant would be $4,250. If the beneficiary is NOT considered low income for all years and no prior contributions were made, the contribution would be $4,000. For example:
A contribution in 2012 of $4,250 would have entitlement room calculated as follows:
- 2008, 2009, 2010, 2011; $2,000 contribution of $500 for 4 years earns a $6,000 grant
- 2008,2009, $2,000 contribution of $1,000 for 2 years earns a $4,000 grant
- in 2010 the last contribution of $250 would be @ 200% earning a $500 grant
- Total $10,500 in grants (the annual maximum for a grant)
If a beneficiary turns 49 in the year when a contribution is made, he/she will still be eligible to benefit from the Carry Forward provision.
Information courtesy Canada Disability Savings Program bulletin; for more information email rdsp-ree@hrsda-rhdcc.gc.ca or call 1 888 276-3632
John.Dowson, Ch LP, is the Executive Director of LifeTRUST Planning, a national company that serves exceptional families across the country. www.life-trust.com 1 800 638-7256