BILL C-45 – “JOBS AND GROWTH ACT, 2012” – PART 1

I. Registered Disability Savings Plans (RDSPs) – 10 Year Rule

To provide greater access to RDSP savings for small withdrawals, this measure replaces the requirement to repay any Canada Disability Savings Grants (CDSGs) or Canada Disability Savings Bonds (CSDBs) paid into the plan in the prior 10 years preceding a withdrawal from the plan with a requirement to repay CDSGs and CDSBs at a fixed ratio to the amount withdrawn.

Regular rules will apply if the RDSP is terminated or deregistered, or the beneficiary ceases to be eligible for the Disability Tax Credit (DTC) or dies.

This measure applies to withdrawals made after 2013.

II. RDSPs – Investment Income Rollover

To provide greater flexibility for parents who save in Registered Education Savings Plans (RESPs) for children with disabilities, this measure allows investment income earned in an RESP to be transferred on a rollover (i.e., tax-deferred) basis to an RDSP if the plans share a common beneficiary.

This will be allowed where the beneficiary has a severe and prolonged mental impairment that can reasonably be expected to prevent the beneficiary from pursuing post-secondary education or the existing conditions for receiving an Accumulated Income Payment (AIP) from the RESP are met.

This measure comes into force on January 1, 2014.

III. RDSPs – Disability Tax Credit (DTC)

To provide greater continuity for long-term saving by RDSP beneficiaries, this measure allows an RDSP to remain open, on an elective basis, for up to five years where the beneficiary is not currently DTC-eligible, but might, due to their condition, be eligible for the DTC in some later year as certified by a medical practitioner.

During this period, no new contributions can be made to the RDSP and no new Canada Disability Savings Grants or Canada Disability Savings Bonds will be paid into the RDSP. Withdrawals will be allowed during the period of the election.

This measure applies to elections made after 2013.

IV. RDSPs – Maximum and Minimum Withdrawals

To provide greater flexibility to make withdrawals from certain RDSPs, the measure proposes to increase the maximum annual limit for withdrawals from primarily government-assisted plans (PGAPs) to the greater of the amount determined by the Lifetime Disability Assistance Payment (LDAP) formula and 10% of the fair market value of plan assets at the beginning of the year.

To ensure that RDSPs are used to support a beneficiary during their lifetimes, this measure also extends to all RDSPs the minimum annual withdrawal requirement that currently applies only to PGAPs. Accordingly, once an RDSP beneficiary attains 60 years of age, the total withdrawals from the RDSP in a calendar year must be at least equal to the amount determined by the LDAP formula for the year.

This measure applies after 2013.

V. RDSPs – Administration

To improve the administration of the RDSP for beneficiaries and financial institutions, this measure requires that Human Resources and Skills Development Canada (HRSDC) be notified “without delay” of the establishment of a plan (instead of the current requirement of notification within 60 days). It also requires that when an RDSP is transferred from one issuer to another, that the transfer be done “without delay” (instead of the current requirement of within 120 days). This is meant to provide issuers with greater flexibility in meeting their obligations. As well, when a plan is transferred from one issuer to another, it will now be HRSDC (rather than the original issuer) that provides the transactional information to the new issuer.

This measure applies upon Royal Assent.

http://www.fin.gc.ca/pub/c45/1-eng.asp