Year-end tax-saving tips for Canadians for 2024 + MORE Dec 6th

The registered disability savings plan (RDSP) is not new—it was introduced in 2008 to help those eligible for a disability tax credit (DTC) save and invest. However, few Canadians know about it. Just one in six—or around 17%—of Canadians have heard of an RDSP, compared to 86% for tax-free savings accounts (TFSAs) and 81% for registered retirement savings accounts (RRSPs), according to a recent survey by Concentra Trust, an Equitable Bank company providing banking and trust services for most of Canada’s credit unions. 

But even among Canadians familiar with the RDSP, there are misconceptions. For example, the survey found that 36% of people with potentially qualifying medical conditions and caregivers who hadn’t opened an account thought they didn’t have enough money to do so. One-third were also unaware of the free government RDSP grants and bonds.

In this article, we’ll clear up the confusion around these and other RDSP details, including five common myths about who can be an RDSP beneficiary, where to open an RDSP and more…

Hear me out. Year-end tax planning can be financially rewarding. It’s a shame so few people do it. There are three objectives: plan to reduce taxes for the current year with legitimate planning opportunities, go back and recover overpaid taxes in prior years and, finally, set yourself up to minimize taxes in the future.

Reduce taxes in the current year

There are several ways to do this:

Fill tax efficiency gaps: Many Canadians have unused tax-advantaged savings room in registered accounts—and this is a real miss. For example, you can invest in your registered retirement savings plan (RRSP) to reduce net income and thereby not just reduce your taxes payable but also increase social benefits you may qualify for, such as the Canada Child Benefit (CCB), the GST/HST Credit and the Canada Dental Care Plan. Open a first home savings account (FHSA) if you qualify to save up to $8,000 a year for a new home. You must open the account to create the annual room, so do so before year end, even if you can only put a small amount of money aside…