DTC RDSP Vicious Circle

in Disability Tax Credit, Registered Disability Savings Plan

While chatting with Kerry from Squawkfox, Mrs. C8j and I did some research and an interesting point was found, about the DTC RDSP vicious circle (DTC is the Disability Tax Credit).

The non-refundable nature of the DTC has created a situation where some low-income disabled people don’t even bother to apply for the DTC, thinking it won’t benefit them. That can often be a mistake, as DTC certification has become a necessary requirement for a number of other government programs, such as RDSPs (registered disability savings plans) and the child disability credit.   “

That one left me quite upset. There is data about how few RDSPs are out there, but this explanation rings far too true for my liking.

This issue exists with RESPs too. Low-income families, think they need to save a lot to make the RESP system work. No! Open the account, put a small amount in there, but you might be eligible for the Canada Learning Bond, which is free money.

The Canada Disability Savings Bond

Getting back to RDSPs, there is a similar benefit for low income families. The Canada Disability Savings Bond is $1000 a year that can be deposited in your RDSP, even if you don’t make a deposit. This is why it is important to help folks with the RDSP.

No one should be leaving this kind of free money on the table.

The DTC RDSP vicious circle is what caused my wife to say, “The whole system is like navigating the fire swamp in the Princess Bride”.  That is a very apt analogy.


  • KC May 10, 2017, 10:38 AM

    Many banks don’t like to promote RDSP too much as they make little money of them (as they need to be more conservative compared to other accounts) and more paperwork to send to the gov’t.

    That’s why at our office, if we prepare any tax returns with the DTC, we include the pamphlet about the RDSP and speak with them in person if possible.

    • bigcajunman May 10, 2017, 10:43 AM

      What kind of accounts? Bank Mutual Fund? It is good you are at least telling them about it, and I agree the Banks are not going to get rich on these accounts, but maybe helping community should still matter to the Bank Upper Mgmt?

      Good to hear you are at least trying to get them educated.


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