Budget 2012 proposed a number of improvements to the RDSP, most of which have not come into effect until two days ago, on January 1, 2014. The changes are:
- Investment income earned in an RESP is now allowed to be transferred on a tax-free basis to an RESP beneficiary’s RDSP. This measure will apply only to rollovers of RESP investment income made after 2013.
- The RDSP 10-Year Rule has been replaced with a new Proportional Repayment Rule. Instead of ALL grant and bond money being paid back if ANY withdrawal took place for the 10-year period after a government contribution—now, within that same 10 years, for each $1 taken from an RDSP, only $3 of any grants or bonds paid into the plan would need to be repaid, up to a maximum of the assistance holdback amount.
- An increase in the annual maximum RDSP withdrawal limit is now allowed, up to 10% of plan savings, as determined by the value of the plan at the beginning of that given year. (As before, there is no withdrawal maximums when personal contributions exceed government contributions.)
- All RDSPs must now be paid out at minimum at the LDAP formula rate for anyone over 60 years of age.
- The period that an RDSP may remain open after the beneficiary ceases to qualify for the Disability Tax Credit is now extended to up to 5 years in length, with certification from a medical practitioner.
These changes received Royal Assent on December 14, 2012.
For further information see Budget 2012.