Video: Registered Disability Savings Plan beneficiary, holder and primary caregiver

From: Employment and Social Development Canada

Transcript

Beneficiary

The beneficiary is the person with a severe and prolonged disability who will receive money from a Registered Disability Savings Plan (RDSP).

The beneficiary:

• must be a Canadian resident
• must be eligible to receive the Disability Tax Credit (DTC)
• must be no more than 59 years old by December 31 of the calendar year the RDSP is opened, and
• must have a valid Social Insurance Number

Disability Tax Credit

The DTC is a non-refundable tax credit. It reduces the amount of income tax that an individual with a severe and prolonged disability may have to pay.

For someone to qualify for the DTC:

• a qualified medical practitioner must certify via form T2201 that the person meets the criteria set out under the Income Tax Act, and
• the Canada Revenue Agency (CRA) must approve the form

Holder

The holder is the person who is responsible for the RDSP. They also deposit the contributions into the RDSP for the beneficiary. Friends and family can only contribute to the RDSP if the holder has provided the issuer with written authorization allowing them to do so.

Who can be a holder

When initially opening an RDSP, who can be the holder? It will depend if the beneficiary is under or over the age majority in the province or territory in which they reside.

Under the age of majority

If the beneficiary is under the age of majority, the holder of the RDSP may be:

• a legal parent, or
• a legal representative, including:
  • a guardian, a tutor, a curator, an agency, an institution, a public department, or
  • any other individual or institution legally authorized to act on behalf of the beneficiary

Over the age of majority contractually competent

Beneficiaries who have reached the age of majority and who are contractually competent must be the sole holder of their RDSP.

In an existing RDSP arrangement, the legal parent can stay on as a holder if they had opened the original RDSP at the time the beneficiary was a minor.

Over the age of majority not contractually competent

Beneficiaries over the age of majority and not contractually competent must have a legal representative as the holder of their RDSP. A legal representative can be:

• a guardian, a tutor, a curator, an agency, an institution, a public department, or
• any other individual or institution legally authorized to act on behalf of the beneficiary

Over the age of majority but contractual competency is in doubt

Beneficiaries over the age of majority whose contractual competency is in doubt (for whom no legal representative is appointed) may have a qualifying family member (QFM) as a plan holder.

A QFM can be:

• the beneficiary’s legal parent, spouse, or common-law partner

A QFM can only open the first RDSP arrangement.

Primary caregiver

The Primary caregiver (PCG) can be an individual or a public entity.

An individual PCG is the person eligible to receive the Canada child benefit (CCB) for the child, as defined in the Income Tax Act.

A public PCG is a department, agency or institution that receives payments under the Children's Special Allowances Act.

Knowledge check

Time for a knowledge check.

Who makes decisions concerning the RDSP? Is it:

1. the beneficiary
2. the PCG
3. Employment and Social Development Canada (ESDC)
4. the holder, or
5. the issuer

Who is eligible to receive the Canada Disability Savings Grant (CDSG) and the Canada Disability Savings Bond (CDSB)? Is it:

1. the beneficiary
2. the holder, or
3. the PCG

To open an RDSP, choose all the beneficiary eligibility requirements that apply:

1. DTC eligible
2. Canadian citizen
3. 59 years or less on December 31 of the year the RDSP is opened
4. Canadian resident
5. 49 years or less on December 31 of the year the RDSP is opened
6. valid SIN