Question #9 – Registered Plans (RDSP)

Mary (35 years old) and Chester (40 years old) are both disabled and qualify for the disability tax credit. They are friends and live separately. Mary reports taxable income of $50,000 and contributes $1,000 to her RDSP while Chester reports taxable income of $250,000 and contributes $1,000 to his RDSP. How much CDSG will each receive from their contributions?

  1. Both will receive $1,000
  2. Both will receive $2,500
  3. Mary will receive $2,500 and Chester will receive $1,000
  4. Mary will receive $3,500 and Chester will receive $2,000

Solution: The grant amounts for Mary and Chester will be different as Mary makes less than the threshold of $95,259 while Chester makes more. Mary will receive grant in the amount of $3 for each $1 contributed (on the first $500) and $2 for each $1 contributed (on the next $1,000). She will receive (500 x $3) + ($500 x $2) = $2,500. Chester will receive $1 for each $1 contributed on the first $1,000 and nothing afterwards. Chester will receive $1,000 in total. The answer is c.

Note: the threshold of $95,259 (for 2019) is adjusted annually for inflation.