The Registered Disability Savings Plan (RDSP)
- The RDSP is a savings vehicle created by the federal government to assist persons with disability with long-term financial security.
- The RDSP has been available since December 2008.
- In February 2014, there were over 80,0000 people in Canada with an RDSP
- RDSP beneficiaries must meet eligibility criteria set by the federal government.
- Participating financial institutions offer RDSPs to eligible members of the public.
- Beneficiaries and their family and friends can make private contributions to an RDSP.
- The federal government’s Canada Disability Savings Grant matches private contributions at rates of up to 300 per cent, depending on the amount of the contribution and the beneficiary’s family income (up to $3,500 annually and $70,000 over the beneficiary’s lifetime).
- The Canada Disability Savings Bond provides government supports to beneficiaries with a low-income, depending on their family income, even if no contributions are made to the plan (up to $1,000 annually and $20,000 over the beneficiary’s lifetime).
- Funds in an RDSP may benefit from investment income and there are special rules on how contributions, funds in an RDSP and withdrawals are treated for tax purposes.
- Most provinces and territories exempt money held in or paid out of an RDSP for the purposes of determining eligibility for income support programs.
- In Ontario, the RDSP does not affect eligibility for or the amount of ODSP payments.
- Payments from the RDSP are primarily intended to be released in pre-determined amounts after age 59. However, one-time withdrawals can be requested in some cases.
- There are no restrictions on the use of money paid out of the RDSP.
For more information on the RDSP, please see the Canada Revenue Agency (CRA) website “Registered Disability Savings Plan (RDSP)”.
The Importance of Capacity When Adults Seek to Access the RDSP
- The Income Tax Act regulates who can open and make decisions about an RDSP.
- Opening an RDSP requires a “plan holder” to enter into a contract with a financial institution. After opening an RDSP, a plan holder may have authority to make other decisions about the RDSP, such as authorizing contributions, deciding investments and requesting one-time withdrawals.
- An adult beneficiary can be the RDSP plan holder. However, where an adult is not legally capable of entering into a contract with a financial institution, another qualifying person must be the plan holder. Qualifying persons can be a guardian or another person who is legally authorized to act on behalf of the beneficiary under provincial laws.
- Ontario does not have a process in place that is specifically for the purpose of establishing a legal representative for the RDSP. The Substitute Decisions Act, 1992 governs the appointment of general substitute decision-makers for property management, including guardians and attorneys.
- Adults and their families have voiced concerns with respect to existing processes within provincial jurisdictions to appoint a legal representative for the RDSP. Many of these processes require that a person be declared incapable, and they can involve a considerable amount of time and expense.
- The Ontario government has acknowledged that adults have experienced challenges in accessing the RDSP when there are concerns about their legal capacity and has requested that the LCO undertake a review of how they might be better enabled to participate in the RDSP.
Capacity and Legal Representation for the RDSP: Final Report
- In November 2014, the LCO released the final report for the project, which presents recommendations for a streamlined process to appoint an RDSP legal representative for beneficiaries in Ontario.
- The final report integrates information gained through extensive research and consultations, including stakeholder responses to several options for reform set out in a discussion paper, released in December 2013.
- From December 2013 to February 2014, the LCO led a dedicated phase for consultations. We held focus groups with key stakeholders across Ontario, conducted individuals interviews and received written submissions from members of the public.
- The LCO has recommended that the Government of Ontario implement a streamlined process that would enable adults to personally appoint an RDSP legal representative to open and manage funds in an RDSP, where there are concerns about their capacity to enter into an RDSP arrangement with a financial institution.
- The LCO’s 10 recommendations detail requirements for the streamlined process, including the test of capacity to grant the personal appointment, safeguards against financial abuse and the eligibility criteria to become an RDSP legal representative.
For more information on the LCO’s final report and recommendations, please see our Final Report Summary.