Calculating RDSP government contributions is a bit of a mystery to some. Here is how they are calculated.
There are two types of RDSP government contributions: the Grant and the Bond. Let’s start with the Grant.
The Grant calculation is based on annual net family income and the amount of money that is privately contributed. Here is how it is calculated when the annual net family income is $91,831* or less.
The first $500
The first $500 of private contributions made to the RDSP in a calendar year attracts $3.00 for every $1.00 contributed. If the private contribution is $100, the government will contribute a $300 Grant. If the annual private contribution is $500, the government RDSP Grant will be $1,500.
The next $1,000
The next $1,000 of private contributions made to the RDSP in a calendar year, attracts $2.00 for every $1.00 contributed. If an additional $100 is contributed by the family, the government RDSP Grant will equal $200. If the full $1,000 is contributed, the government RDSP Grant will equal $2,000.
Adding it all together, if the annual private contribution is $1,500 the government RDSP Grant will equal $3,500. Any private contributions above and beyond $1,500 will not attract additional Grant contributions unless there is any retroactive Grant money available from previous years. To understand how RDSP Grant retroactivity is calculated, click here.
If the annual net family income is greater than $91,831* the government grant matches dollar for dollar up to a maximum of $1,000. In other words, if the annual private contribution equals $1,000 the RDSP Grant will be $1,000. Any private contributions above and beyond $1,000 will not attract additional Grant contributions unless there is any retroactive Grant money available from previous years.
The Bond does not require a private contribution. It is solely based on family income.
When family income is $ 30,000* or less
The RDSP Bond contribution is $1,000.
When family income is between $ 30,000* and $45,916*
A prorated amount of the RDSP Bond is provided.
When the annual net family income is greater than $ 46,916*
An RDSP Bond contribution is not provided.
A note about annual net family income. If the beneficiary of an RDSP account (the person with the disability) is a minor, the family income is based on the parents’ collective incomes. Once the beneficiary reaches the year they turn 19 years of age, family income is based on his/her own income, even if they live with their parents. If the beneficiary is married or has a common-law spouse, family income is based on their collective income.
Where the beneficiary of the RDSP is an adult but is supported by his/her parents whose collective net income exceed $91,831 can expect the maximum Grant and Bond contributions from the government, if the beneficiary (the person with the disability) earned less than $30,000 in net income. While the parents make the private contributions to the RDSP, the Grant and Bond contributions are based on the beneficiary’s income (or their income combined with their spouse’s, if they are married or common law) because they are not a minor. As a result, the maximum Grant and Bond contributions are received.
*All income thresholds are 2015 net income figures which are used to determine 2017 RDSP government contributions. Grant and Bond calculations for any given year, use net family income figures from the 2nd year previous to the year in question. To determine 2017 Grant and Bond amounts, net family income from 2015 is used. In 2018, net family income from 2016 will be used. Income thresholds increase each year in accordance with inflation.
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You can contact Ron Malis at email@example.com