Vol. 148, No. 13 — June 18, 2014
Registration
SOR/2014-134 May 29, 2014
CANADA DISABILITY SAVINGS ACT
Regulations Amending the Canada Disability Savings Regulations
P.C. 2014-620 May 29, 2014
His Excellency the Governor General in Council, on the recommendation of the Minister of Employment and Social Development, pursuant to section 17 of the Canada Disability Savings Act (see footnote a), makes the annexed Regulations Amending the Canada Disability Savings Regulations.
REGULATIONS AMENDING THE CANADA DISABILITY SAVINGS REGULATIONS
AMENDMENTS
1. Paragraphs 2(e) and (f) of the Canada Disability Savings Regulations (see footnote 1) are replaced by the following:
- (e) the beneficiary is a DTC-eligible individual in respect of the year in which the contribution is made, and in respect of the year or years to which the contribution is allocated; and
- (f) the issuer complies with the requirements of these Regulations and the terms and conditions of the issuer agreement that applies to the RDSP.
2. (1) Paragraph 3(b) of the Regulations is replaced by the following:
- (b) the holder requests, no later than December 31 of the year in which the beneficiary attains 49 years of age, that the issuer submit an application for the bond;
(2) Paragraph 3(f) of the Regulations is replaced by the following:
- (f) the issuer complies with the requirements of these Regulations and the terms and conditions of the issuer agreement that applies to the RDSP.
COMING INTO FORCE
3. These Regulations come into force on the day on which they are registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Issues
Recent amendments to the Canada Disability Savings Act (the Act) permit beneficiaries of Registered Disability Savings Plans to “carry forward” entitlements to Canada Disability Savings Grants and Bonds for 10 years (carry forward measures). Although the carry forward measures came into effect in 2011, the measures are not fully reflected in two provisions in the Canada Disability Savings Regulations (the Regulations) and there is a corresponding risk of misinterpretation by stakeholders.
In addition, the Standing Joint Committee for the Scrutiny of Regulations (SJCSR), in their review of the Regulations, has identified a technical issue in the language of the regulatory text.
Background
Registered Disability Savings Plans (RDSPs) help Canadians with disabilities and their families save for the future. An RDSP can be opened by/for any individual who qualifies for the Disability Tax Credit (DTC), is a Canadian resident with a social insurance number, and is under the age of 60. Depending upon the amount contributed, and the beneficiary’s family income, the Government will pay a matching Canada Disability Savings Grant (a grant) of up to $3,500 per year to the RDSP subject to a lifetime limit of $70,000. Low- and moderate-income beneficiaries may also be eligible to have a Canada Disability Savings Bond (a bond) of up to $1,000 paid annually into their RDSPs, subject to a lifetime limit of $20,000.
RDSPs are intended to be long-term savings vehicles. Since long-term disability assistance payments must commence by age 60, the latest that a bond or grant can be paid into an RDSP is the year in which the beneficiary turns 49 years old.
Prior to the introduction of the carry forward measures, Canadians with disabilities, who were otherwise qualified, lost their entitlement to a grant for any given year unless a contribution to an RDSP was made during that year, and an application for a grant submitted. Similarly, entitlement to a bond for any given year was lost unless an application for a bond was submitted before the end of the year. This created hardship for many Canadians with disabilities and their families who faced multiple financial obligations and were unable to contribute regularly to an RDSP or who delayed setting up an RDSP.
Amendments to the Act, announced in Budget 2010 and included in the Sustaining Canada’s Economic Recovery Act, permit beneficiaries of RDSPs to “carry forward” grant and bond entitlements for 10 years starting from 2008, the year RDSPs first became available to the public. RDSP beneficiaries now receive their full grant and bond entitlements under the carry forward measures.
Objectives
The objectives of the Regulations Amending the Canada Disability Savings Regulations (the amendments) are to better align the Regulations with the carry forward measures in the Act, more clearly explain how they operate in practice, and respond to a concern raised by the SJCSR.
Description
The amendments will align the Regulations with the Act by clarifying, in paragraph 2(e), that RDSP beneficiaries are not eligible for a grant under the carry forward measures during a prior year when they were not eligible for a DTC.
The amendments further clarify, in paragraph 3(b), that an RDSP holder (see footnote 2) does not need to apply for a bond in each year in order for a bond to be payable for that year. However the RDSP holder must request, no later than December 31st of the year in which the beneficiary has reached the age of 49, that the issuer (financial institution) submit an application for the bond.
Finally, the amendments respond to a concern raised by the SJCSR by removing the subjective phrase “in the opinion of the Minister” from paragraphs 2(f) and 3(f).
“One-for-One” Rule
The “One-for-One” Rule does not apply to this proposal, as there is no change in administrative costs to business.
Small business lens
The small business lens does not apply to this proposal, as there are no costs imposed on small business.
Consultation
Budget 2010 contained a commitment to amend the Act to permit RDSP beneficiaries to carry forward 10 years of grant and bond entitlements. This commitment followed representations made by people with disabilities and their families, that multiple financial obligations prevented them from contributing regularly to an RDSP or caused them to delay setting up an RDSP.
Amendments to the Act were subsequently included in the Sustaining Canada’s Economic Recovery Act, providing Parliament with the opportunity to review the carry forward measures.
Given that the amendments are clarifying in nature, with no impact on the administration or operation of the carry forward measures considered by Parliament, no additional consultations were required.
Rationale
The amendments will align the Regulations with the carry forward measures in the Act, improve clarity for RDSP beneficiaries and financial institutions, and ensure that the carry forward measures continue to operate as intended. These amendments are clarifying in nature and will have no impact on potential or current beneficiaries.
The removal of the phrase “in the opinion of the Minister” from paragraphs 2(f) and 3(f) will make these paragraphs less subjective, while still allowing the Minister to refuse to pay a grant or bond in cases of non-compliance with the Regulations or the conditions of an issuer agreement (between a financial institution and the Minister).
Implementation, enforcement and service standards
The amendments will have no impact on the administration or operation of the program. The amendments will come into force on the day on which they are registered. Participating financial institutions will then be informed that the Regulations have been amended to provide additional clarity.
Contact
Etienne-René Massie
Director
Program Division
Office for Disability Issues
105 De l’Hôtel-de-Ville Street, 1st Floor
Gatineau, Quebec
K1A 0J9
Telephone: 819-624-7669
Fax: 819-994-8750
Email: etiennerene.massie@hrsdc-rhdcc.gc.ca
- Footnote a
S.C. 2007, c. 35, s. 136 - Footnote 1
SOR/2008-186 - Footnote 2
The holder is the person or organization that opens and manages the RDSP. For beneficiaries under the age of majority, the holder can be a legal parent, legal representative or public department. For beneficiaries over the age of majority, the holder is generally the beneficiary. In certain circumstances, a guardian, legal representative or public department may be eligible to become the holder. Until the end of 2016, a qualifying family member (beneficiary’s spouse, common-law partner or parent) can also become the plan holder and open an RDSP on behalf of an adult beneficiary who might not be able to open a plan due to concerns about their ability to enter into a contract.