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:

  1. 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.
  2. 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.
  3. 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.)
  4. All RDSPs must now be paid out at minimum at the LDAP formula rate for anyone over 60 years of age.
  5. 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.