Canadian Personal Finance Blog

Let me preface this with, this stuff is complicated. I have read over the documentation, and this is my interpretation of what I have read. While it is important to have rules to ensure systems are not abused, this is a bit extreme. The SDSP (Specified Disability Savings Plan) is one of the exceptions possible in the RDSP program, keep that in mind. If you are unsure, call for help.

The Registered Disability Savings Plan (RDSP) has strict rules for withdrawals. The rules ensure that the RDSP “…cannot be used like a chequing account…”. That was a direct quote from an ESDC source.

I will be writing more about this, in the near future.

The rules for withdrawals are:

“Whenever money is withdrawn from an RDSP, all or part of the grants and the bonds that have been in the RDSP for fewer than 10 years must be repaid to the Government. You must repay $3 for every $1 that is taken out, up to the total amount of grants and bonds paid into the RDSP in the last 10 years. Repayments to the Government of Canada will be applied starting with the oldest grants and bonds paid into the plan first, and then towards the newest.”
— ESDC RDSP Withdrawal page

Specified Disability Savings Plan SDSP

The specified disability savings plan SDSP, is a clause in the RDSP for disabled people with a shorter life expectancy. It allows families dealing with the imminent death of a loved one to extract money (early) from an RDSP (without penalties).

To get an SDSP, the beneficiary must have an RDSP.  A Doctor must attest the holder of the RDSP will most likely die within 5 years. The RDSP holder then must elect to convert their RDSP to an SDSP, and ESDC must approve this election.

Once the RDSP changes to an SDSP no further money can be deposited in the account. If money is deposited, the SDSP will revert back to an RDSP. In this instance all associated early withdrawal penalties, would come into play.

The maximum that can be taken out per year from the fund is $10,000.

This is one of the few exemptions for taking money out of your RDSP early. Remember the RDSP is a very long-term savings vehicle.

In these days of COVID, many bank services are not as easy as before. We are trying to open a bank account for my son. All we wanted to do was open a Kids Savings account, that would give him a bank access card too.

Our family has done allowances this way for a long time. We automate the money going to the child, as a weekly deposit to a no fee TD bank account. This method worked well with my daughters.

My son, being on the autism spectrum, we weren’t sure how this would work. Happily he has asked about banking and wishes to have an allowance, so we are now trying to open a bank account for him.

For Tangerine, you have two options:

1. For a kid who is less than 16 years old you can open a straight savings account. This can be done over the phone. We didn’t want to use this because it would not include a bank access card.
2. For a student 16 years and older they have a student chequing account. This comes with a bank card, however, my son is not old enough and he does not need chequing capabilities, yet. This is done on-line.

We decided we were going to try to create a TD Kids Savings account. I called Easyline and was told this can only be done at a bank branch face-to-face. This is how we did it for my daughters. I was hoping we could do this on-line or over the phone, but no, this is not possible.

To book a face-to-face meeting with our local branch, takes at least 2 weeks, thanks to COVID. All bank branches are running with smaller staffs, and they are not open for as long. Banks are closed on Sundays, during the pandemic.

I had to wait 2 weeks to open my son’s bank account. Patience is not something my son has mastered yet, so there was a lot of nagging on his part about his bank account.

Epilogue

Finally managed to set up the account, but a few interesting new wrinkles.

1. The account is a TD bank account. This type of account no longer is automatically on my Easyweb. Previously all my older kids’ accounts were visible.
2. Still a lot of “paper” work. The amount of physical paper in the banking system must make Domtar proud.

Addendum

A few folks have asked, I had to have 2 pieces of identification for my son. In our case we used a valid passport and his birth certificate.

For students, there are a few well known tax credits, however, many forget about moving expenses.

As long as you are going farther than 40 KM from home to go to school, you should be able to claim line 21900 Moving Expenses.

Kind of Moving Expenses

As a former Co-Op student, I ended up moving every 4 months. I became quite adept at making my life fit the trunk of a Mercury Zephyr.

Remember it is important to keep all receipts and proof of distance in case the CRA wants proof of moving.

TL:DR So I accidentally hit the wrong button and republished this. I wrote it about 10 years ago, but it is still true. Land Transfer taxes are an expense many folks forget about, don’t.

The Land Transfer Tax is one of those interesting pains in the rear in parts of Ontario.

It bites you when you are thinking about buying a house or property. Luckily when I bought my first house, I didn’t have to pay the land transfer tax. I used an Ontario Home Owner Savings Plan (along since gone program). The main feature (for 1st home buyers only) was not having to pay the Land Transfer Tax. This forgiving of the Land Transfer Tax on first homes has been replaced by the  Land Transfer Tax Refund for First-time Homebuyers (please read that carefully).

Unfortunately the second house I bought I had to fork out my land transfer tax, and I grumbled a great deal about it. This cost is one of those forgotten costs that is rarely mentioned, until closing costs are discussed. The danger is you might buy less house if you thought about it as part of your purchasing price, but you should think about it before you make an offer on a house.

Land Transfer Tax Calculation

From an Ontario Government page, the tax is calculated in the following way:

The tax rates on the value of the consideration are as follows:

Prices up to and including $55,000 -0.5 %

Amounts exceeding $55,000 up to and including $250,000 - 1.0 %

Prices exceeding $250,000 - 1.5 %

Amounts exceeding $400,000 where the land contains one or two single family residences – 2.0 %

For the definition of “single family residence,” as defined in subsection 1(1) of the Act please see the end of this bulletin or the Act.

On the basis of that simple formula for residential properties, you could put this in your Excel-like spreadsheet and get the right answer (based on the calculation proposed on the government web page):

=IF(B4<=55000,(B4*0.005),IF(B4<=250000,((B4*0.01)-275),IF(B4<=400000,((B4*0.015)-1525),((B4*0.02)-3525 ))))

Where the B4 cell holds the actual selling price of the residential property. An example output might be:

Easy enough to figure out, but don’t forget it is there! If you are buying a  $1/2 Million dollar house $6475 may seem like chump change, and if you think so, please stroke me a cheque for that amount, and see how it feels then.