A is the amount of the disability assistance payment
B is the total by which all contributions to date to the RDSP exceeds the total of the non-taxable portions of all previous disability payments from the RDSP
C is the amount by which the fair market value of the property held by the RDSP immediately before the payment exceeds the assistance holdback amount.
Example for first lifetime disability assistance payment:
Disability assistance payment (A) is $12,893 per year.
This is the first payment, so B is equal to all contributions to date to the RDSP, or $30,000 (20 years @$1,500).
Total lifetime CDSGs and CDSBs equal $90,000 (20 years @$4,500).
Total CDSGs and CDSBs in the previous 10 years equal $45,000.
Fair market value of the RDSP is $296,538.
The assistance holdback amount is $45,000, the total of CDSGs and CDSBs paid in the previous 10 years.
C is $296,538 - $45,000 = $251,538.
The taxable portion of the disability assistance payment is
$12,893 - [$12,893 x $30,000 / $251,538] = $11,355.
This is included in the taxable income of the beneficiary, or if the beneficiary has died, the beneficiary's estate.
The assistance holdback amount of $45,000 would have to be repaid to the government when the above disability assistance payment is made. (Canada Disability Savings Act Regulations s. 5(c)).
Next: Termination of the RDSP
Back to RDSP main page
Revised: October 29, 2014
Copyright © 2002 - 2017 Boat Harbour Investments Ltd. All Rights Reserved See Reproduction of information from TaxTips.ca