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Registered Disability Savings Plan proposal
October 9, 2025
October 2, 2007, Finance released the Registered
Disability
Savings Plan for persons who qualify for
the Disability Tax
Credit.
Approximately 800,000 Canadians with a disability
should
qualify because they currently are approved
for the DTC
credit on Form T2201.
RC4064
Medical and Disability Related Information Guide
on
the CRA website and T2201 provide information
about how to
qualify for this credit. The credit is
transferrable to
supportive spouses/partners or
other relatives who pay tax
if the person with the
disability does not pay tax.
The
provinces/territories have not bought in to the plan
so
far. Most provincial social benefits programs
test for
income, means and needs and these tests
for benefit
programs are not addressed by this
legislation. The OAS
Clawback and EI have been
addressed in this proposal.
Federal benefits for
CPP, GIS and provincial/territorial
benefits will
be affected.
The provinces/territories are
being invited by the feds to
contribute a further
grant on top of the $70,000 matching
grant program
and $20,000 bond for lower income
beneficiaries,
but to date, no one has stepped up to the
plate.
They are probably waiting to see how this plan
is
received or until their next election is
announced.
The maximum lifetime
contribution by anyone with approval
of the
directors for the beneficiary is $200,000. The
plan
is irrevocable and for the benefit solely of
the
beneficiary. The plan can not be assigned or
used as
security for anything, nor can payments
from it be pledged
to anyone.
Withdrawals may commence earlier, but are required
to
commence at age 60.
Contributions
to the RDSP are only for the beneficiary and
are
passed to the estate of the beneficiary on their
death.
If the plan is de-registered because the
person is no
longer considered disabled, the plan
is collapsed to the
benefit of the beneficiary, not
to the contributors to the
plan.
Directors will be jointly, severally and solely
responsible
for tax on income and Issuers of the
plan are required to
protect Directors.
Directors may be the beneficiary, or family or
other
appropriate parties. I can see competence of
the
beneficiary being called into question by
families or other
parties seeking to control the
plan.
Income and capital will be calculated
pro-rata on each
withdrawal and income will be
taxed as RDSP income, not as
social assistance.
Repayments of excess income paid in error
will be
deductible to the beneficiary.
Link to the Dept of Finance Website for more
information:
http://www.fin.gc.ca/news07/07-074e.html
Regards,
Eileen Reppenhagen,
CGA
www.taxdetective.ca
--
Disclaimer:
Eileen Reppenhagen CGA does
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