"There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things."

~ Niccolo Machiavelli, historian and writer

Wednesday, April 28, 2010

Good News on RDSP Front

I just moseyed over to the RDSP blog and came across some good news.

Apparently the most recent Federal budget dealt with the RDSP. Who knew?

First:
In recognition that families of children with disabilities may not be able to contribute regularly to their Registered Disability Savings Plan (RDSP), Budget 2010 proposes to allow a 10-year carry forward of Canada Disability Savings Grant (CDSG) and Canadian Disability Savings Bond (CDSB) entitlements. In event of delays of opening a RDSP as a result of the complex guardianship processes that are in place in some provinces, the proposed carry forward will preserve a
beneficiary’s entitlement to CDSGs and CDSBs so that they are available when a plan is opened.
Then:
In the Budget, the government is also encouraging all provinces to look at introducing more streamlined alternative processes to formal guardianship arrangements, such as those in place in British Columbia.
And finally:
To provide parents more flexibility in ensuring that their savings may be used to support a disabled child, when they are no longer able to support the child, Budget 2010 proposes to allow a deceased individual’s RRSP or RRIF proceeds to be transferred, on a tax-free basis, to the RDSP of a financially dependent infirm child or grandchild.
The rollover provisions not only offer a way to provide for a disabled family member after you're gone, but can also involve a potentially large tax saving - instead of the entire amount in an individual's RRSP or RRIF becoming taxable income the year they die, the funds can now be passed into an RDSP, with no tax payable. And when the funds are eventually withdrawn from the RDSP, they will be taxable in the hands of the beneficiary, at the beneficiary’s tax rate. You can get more information abut this at the RDSP blog.

Although as an aside, I might just note that although the RRSP rollover is certainly a step in the right direction, I, for one, would really like to see the federal government allow the rollover of RESPs into RDSPs for our kids.

The second change is the ability to carry forward entitlements for the Canada Disability Savings Grant and Bond for up to 10 years. Which means that someone opening a plan now will be able to claim the Grant for both 2008 and 2009.

Most of us are, unfortunately, pretty familiar with the issue around guardianship and the RDSP. And well aware that because the laws governing legal representation are provincial, unlike BC, families in Nova Scotia do not have the benefit of Representation Agreements.

And although PLAN has proposed various short term solutions to the federal government to deal with this issue, the feds apparently prefer for it to "be done right" and wait for the provinces and territories to make the necessary legislative reforms. The new carry forward rules will at least mean that people will not be penalized while we await movement on that issue.

For each province to implement something resembling British Columbia's Representation Agreement does appear to be the best option. As noted on the RDSP blog, people with disabilities, families, seniors and others who have used Representation Agreements certainly seem to report positive experiences with these Agreements.

And as also noted on the RDSP blog, Canada's recent ratification of the UN Convention on the Rights of People with Disabilities should provide an added incentives for provinces to take another look at the Representation Agreement.

And, so, it marches on.

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