Closing the Poverty Gap with a Registered Disability Savings Plan (RDSP)
On April 7th, 2018 The Province published a commentary by Al Etmanski that highlighted some of the missed opportunities that exist with Registered Disability Savings Plans (RDSPs).
Al highlights how Canada’s Registered Disability Savings Plan is the first poverty-fighting tool for people with disabilities in the world. The plan, which was created in 2008, is a coordinated effort of federal, provincial, and territorial. RDSPs have already benefited more than 150,000 Canadians with disabilities.
The article argues that the RDSP is only reaching 29% of those eligible. Due to restrictions set by the Canada Revenue Agency (CRA), it is not available for many other Canadians with disabilities who are poor. Al further argues that for this this to change, two things must happen: administration of the RDSP and the Disability Tax Credit must be taken out of the hands of the CRA and co-ordinated national action to eliminate the link between disability and poverty must begin.
Since the RDSP has three components: contributions by the individual, family or community; matching federal grants; and a disability Savings Bond of $1,000 a year. To be eligible, an individual must first quality for the Disability Tax Credit. Being eligible for the Disability Tax Credit, is where the issue often lies and something we highlighted in one of our blog posts on December 7th.
Ten years from when the RDSP was created, it is clear that financial freedom for Canadians with disabilities makes a big difference. There is a discernible pride and confidence among those who have an RDSP. Etmanski notes that the RDSP enables them to \”dream and start controlling their destiny\”.
In his article, Al goes onto to discuss individuals with disabilities and its relationship with poverty. He notes that the RDSP is only one tool among many that are needed because 70% of Canadians with disabilities still live in poverty. Etmanski offers four recommendations to improve the RDSP and raise Canadians with disabilities out of poverty. These include:
- Automatic enrolment in a RDSP once an individual becomes eligible for a Disability Tax Credit.
- Remove CRA responsibility for assessing & providing eligibility for disability tax credits.
- Federal accessibility legislation should address poverty.
- Create a Guaranteed Basic Income Supplement for Canadians with disabilities
To learn more about the RDSP and Al Etmanski\’s recommendations for a change in the current program, please visit the original article in The Province.