Registered Disability Savings Plan
January 11, 2011
Message from Orville Endicott
Legal Counsel
Community Living Ontario
(from an e-mail received On January 6, 2011)
One thing you should know is that the federal governement has amended the RDSP legislation, effective Jan. 1, 2011, to permit people to open RDSPs and/or make contributions to existing Plans going back as far as 2008, the year the RDSP came into being. Until now, the ligislation required people to contribute by Dec. 31st for each calendar year. See below for details.
Dear Community Partner,
On March 4, 2010, the Government of Canada, through its Budget 2010, announced two enhancements to the Registered Disability Savings Plan (RDSP), grant and bond. We are pleased to advise that the legislation to enact these changes received Royal Assent on December 15, 2010. The ‘carry forward' and ‘roll over' provisions will provide Canadians with disabilities and their families with more flexibility when saving for the future.
Please find below some questions and answers that we hope will assist you in helping your members and clients to understand and benefit from these new provisions.
What is the carry forward?
As people with disabilities and their families may not be able to contribute regularly to their RDSPs, the carry forward allows beneficiaries to claim unused grant and bond entitlements for a 10-year period (starting from 2008, the year RDSPs became available). In order to claim unused grant and bond entitlements, the beneficiary must be eligible to receive the grant and bond (at the time of the claim, the beneficiary must be aged 49 or under).
Grant and bond entitlements are based on the beneficiary's family income. The grant amount also depends on how much is contributed to the RDSP. For unused grant entitlements, the matching grant rate will be the same as what would have applied in the year the entitlement was earned.
When does the carry forward come into effect?
The carry forward comes into effect on January 1, 2011.
As it will take time to develop the electronic system to process these transactions, the functionality to administer the carry forward will not be available immediately. Therefore, 2011 carry forward entitlements are expected to be paid into RDSPs in early 2012.
Is there a special application form for the carry forward?
Whether an individual already has an RDSP, or opens an RDSP in January 2011 or thereafter, a special application form will not be required for the carry forward. Grant and bond entitlements will be calculated automatically.
What is the roll over?
The proceeds (or a portion thereof) from a deceased individual's Registered Retirement Savings Plan (RRSP), Registered Retirement Income Fund (RRIF), and Registered Pension Plan (RPP) can be rolled over, tax free, into the RDSP of a financially dependent child or grandchild with a disability.
The amount of money rolled over into an RDSP will form part of the $200,000 lifetime contribution limit. For example, if there is already $50,000 in private contributions in an RDSP, the amount rolled over from an RRSP, RRIF and RPP cannot exceed $150,000.
A matching grant will not be paid on RRSP, RRIF and RPP contributions.
When does the roll over come into effect?
The roll over comes into effect July 2011. This measure will be effective for individuals who pass away after 2007.
BACKGROUNDER
The RDSP is a long-term savings plan that helps people with disabilities, and their families, save for the future. To be eligible, a person must be:
- under the age of 60;
- a Canadian resident with a social insurance number; and
- eligible for the Disability Tax Credit (Disability Amount)
There is no annual contribution limit to the RDSP, but there is a lifetime contribution limit of $200,000.
To help people save, the Government of Canada will pay a matching grant of up to $3,500 a year, depending on the amount contributed and the beneficiary's family income. There is a lifetime limit of $70,000 in grant payments.
The Government of Canada will also pay a bond of up to $1,000 a year into RDSPs of low- and modest-income Canadians. There is a lifetime limit of $20,000 in bond payments. No contribution is necessary to receive the bond.
Grants and bonds will be paid until the year the beneficiary turns 49.
For more information about the RDSP, grant and bond, please visit www.disabilitysavings.gc.ca or call
1 800 O-Canada (1 800-622-6232). TTY users may call 1-800-926-9105. A detailed brochure - available in alternate formats such as large print, Braille, audio cassette, CD, DAISY, and computer diskette - is also available by calling these numbers.
Should you wish to make an inquiry by e-mail, please send your message to
rdsp-reei@hrsdc-rhdsc.gc.ca.
Sincerely,
RDSP, Grant and Bond Outreach Team
January 21, 2009
Link to the Canada Revenue Agency website page on RDSP
http://www.cra-arc.gc.ca/gncy/bdgt/2007/rdsp-eng.html
Link to Community Living Ontario website page on RDSP
http://www.communitylivingontario.ca/page/registered%20disability%20savings%20plan.aspx.
January 5, 2009
For Your Information Only.
Due to the Federal Government announcement today, extending the deadline to
set up 2008 RDSPs, we will have not have to rush the process over the
holidays. (Press release attached below).
Contact our office after January 5, 2009 if you would like us to action an
RDSP for the Special Needs person in your life and we will be happy to
assist. For those who have already contacted us, we are asking you to go to
a local branch of the Bank of Montreal to open a "BMO Profile" (this is not
an account) if you are not currently an account holder with BMO.
BMO has graciously provided our office with all of the required forms to be
completed for the RDSP account opening as well as the Grant and Bond forms,
to make it easier to assist our clients.
We are glad to have until March to set up the 2008 accounts. We had been
actively communicating with the Federal Finance Minister and Federal
Minister of Human Resources and Skills Development to request an extension
given the slow rollout by the banks.
On behalf of my office, I would like to personally wish you a very merry
holiday.
Ken.
Toronto, December 23, 2008
2008-110
Government Welcomes National Availability of Registered Disability Savings
Plans and Extends Deadline for Establishing a Plan and Applying for the 2008
Grant and Bond
At an event celebrating the national availability of Registered Disability
Savings Plans (RDSPs), the Honourable Jim Flaherty, Minister of Finance, and
the Honourable Diane Finley, Minister of Human Resources and Skills
Development, today announced that the deadline for opening an RDSP, making
contributions and applying for the matching Grant and the income-tested Bond
for the 2008 contribution year has been extended to March 2, 2009 from
December 31, 2008. The 2009 RDSP contribution year will begin March 3, 2009.
"The Government announced RDSPs in Budget 2007 to help parents and others
set aside funds today to financially support a child with a severe
disability when they are no longer able to provide support," said Minister
Flaherty. "I am very pleased that this long-term financial support is now
available and I congratulate the Bank of Montreal for being the first major
bank to offer RDSPs.
"To ensure that as many individuals as possible can establish an account and
be eligible for a full year of the Canada Disability Savings Grant and the
Canada Disability Savings Bond, we are pleased to announce a two month
extension to the 2008 deadline for opening an RDSP and applying for the 2008
Grant and Bond."
"We want to help parents and families that care for people with disabilities
to save toward the long-term security of their loved ones," said Minister
Finley. "The RDSP is a long-term tax-assisted savings vehicle to support the
vulnerable and to provide assistance to those Canadians who face unique and
difficult challenges. About 280,000 Canadians are eligible to open RDSPs."
"Congratulations to Canada for showing the world the way in making sure that
people with disabilities and their families get the long-term financial
support and peace of mind they need," said Tom Flynn, Executive
Vice-President and Chief Risk Officer, BMO Financial Group and Vice Chair
Bloorview Kids Rehab. "BMO is very pleased to be the first major Canadian
financial institution to offer the RDSP. On a personal note, as someone who
knows many children and families who will benefit from this, I extend my
heartfelt thanks to everyone who turned a great idea into a great program."
"On behalf of families from coast to coast, the Planned Lifetime Advocacy
Network would like to thank the Government of Canada for its leadership in
implementing an RDSP, the first of its kind in the world," said Al Etmanski,
President of PLAN. "With my daughter, Liz, I have been eagerly awaiting this
announcement. Aside from ensuring the financial well-being of our sons and
daughters, the Government of Canada is sending a major signal to Canadians
with disabilities and their families-'we know you have extra expenses; we
know you want to participate and contribute to society; we trust you to
decide how best to do this.'"
Individuals who qualify for the disability tax credit, their families and
others may save for the long-term financial security of a person with a
severe disability by contributing to an RDSP. These contributions may be
supplemented by matching Canada Disability Savings Grants from the
Government of Canada. The Canada Disability Savings Bond is also available
for low- and middle-income families even if no contributions are made.
The RDSP is a tax-assisted savings plan. Contributions to an RDSP will not
be deductible, nor will they be included in income when withdrawn.
Investment income, grants and bonds are included in the income of the
beneficiary when withdrawn from an RDSP.
To maximize the effectiveness of RDSPs and ensure that payments from the
plan supplement rather than reduce income and benefits from other sources,
amounts paid out of RDSPs will not affect federal income-tested benefits and
credits such as the Canada Child Tax Benefit, the Goods and Services Tax
Credit and Old Age Security.
The Government of Canada has also worked with the provinces and territories
to ensure that RDSPs are as effective as possible. To date, Newfoundland and
Labrador, Ontario, Manitoba, Saskatchewan, Alberta, British Columbia and the
Yukon have announced that RDSP income and assets will not affect
calculations for income support benefits. Quebec, New Brunswick and Prince
Edward Island have announced that RDSP payments will be exempt from income
support reductions up to certain limits. The Northwest Territories announced
a limited income exemption from social assistance, which will partially
accommodate beneficiaries of RDSPs.
RDSPs are also now available to Canadians with disabilities who reside in
Quebec at the Société de gérance des Fonds FMOQ, which is also accepting
applications for the grant and bond.
Additional information on the grant and bond can be found on the Human
Resources and Skills Development Canada website at: HYPERLINK
"http://www.hrsdc.gc.ca/disability"www.hrsdc.gc.ca/disability.
December 23, 2008
Flaherty announces tax-free savings plan for families of disabled people
The Canadian Press
December 23, 2008 at 9:52 AM EST
TORONTO. The federal government will allow families of people with a disability to set up tax-free savings under a new registered disability savings plan.
Finance Minister Jim Flaherty says the plan, originally proposed in the March 2007 budget, will allow parents and siblings of disabled people to accumulate money on a tax sheltered basis.
Mr. Flaherty estimates about 280,000 Canadians would be eligible to open RDSPs.
Ottawa will provide matching grants of up to $3,500 per year for the plans, which will have a lifetime limit of $200,000.
Speaking in Toronto this morning, Flaherty said the deadline to set up and contribute to the plans for 2008 will be extended to March 2 next year.
