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Several reforms important to people with disabilities became law in mid-December when Bill C-47 (the last of the budget Bills) was passed by the Senate and given Royal Assent.

In his budget, Finance Minister Flaherty announced carry forward provisions for the Canada Disability Savings Grant and Bond as well as provisions for the rollover of RRSPs and RRIFs to the RDSPs of sons, daughters and grandchildren.

1.  Carry Forward Provisions for RDSP Grants and Bonds

Effective 2011, people’s Canada Disability Savings Grant and Bond entitlements can be carried forward.

When a person opens an RDSP, Canada Disability Savings Bond entitlements will automatically be calculated and paid into the plan for the preceding 10 years (but not before 2008, when the RDSP was launched).  This means people opening RDSPs in January, 2011 will can qualify (based on income) for up to $4,000 in Canada Disability Savings Bond – $1,000 for each of 2008, 2009, 2010 and 2011.

At the same time, the balances of unused CDSG entitlements will be determined for the same period. If contributions are made to the RDSP, Canada Disability Savings Grants will be paid on unused entitlements, up to an annual maximum of $10,500.  The matching rate on unused entitlements will be the same as if the contribution were made in that year.  In addition, contributions will be used against Grant entitlements at the highest rate first.

That means a contribution of $2,000 into a new RDSP in 2011 will result in a Canada Disability Savings Grant payment of $6,000 ($2,000 x 300%).  Combined with the Canada Disability Savings Bond, the result will be $10,000 from the federal government.

That’s equivalent to turning $2,000 into $12,000!  See table below:

Canada Disability Savings Bond $4,000
Contribution $2,000
Canada Disability Savings Grant $6,000
Total in RDSP $12,000

2.  RRSP/RRIF Rollover to a Registered Disability Savings Plan

The new provisions will permit parents and grandparents to rollover RRSPs and RRIFs, at death, to the RDSPs of financially dependent children and grandchildren, on a tax deferred basis.  A person is generally considered to be financially dependent if their income is below a specific threshold ($17,621 for 2010). A person whose income is above this amount may also be considered to be financially dependent if dependency can be demonstrated.

Normally any assets held in RRSPs and RRIFs become income in the year of the death.  When these assets are passed to the RDSP of a child or grandchild, the tax that would normally be payable is waived.

The amount of the rollover may not exceed the beneficiary’s available RDSP contribution room. That means as much as $200,000 can be rolled into a new RDSP.  If contributions have already been made then the amount will equal $200,000 minus previous contributions (This doesn’t include federal government contributions).

The rollover will count as contributions towards the beneficiary’s lifetime limit but will not be matched by Canada Disability Savings Grants. The rollover will be considered private contributions for the purpose of determining whether private or government contributions are greater. But because the rollover will not have been subject to income tax, it will be considered taxable when withdrawals are made.

The rollover is effective for deaths occurring on or after March 4, 2010. For deaths of an RRSP annuitant after 2007 and before 2011, special transitional rules will apply.


Reminder: if you are new to this blog and want a detailed description of the RDSP please click on the header under “RDSP FactSheet” or “RDSP Information Bulletin”

In order to be eligible to set up a Registered Disability Savings Plan you must receive or be eligible for the Disability Tax Credit.  The Disability Tax Credit can be applied for by filling out Form T2201 and submitting it to the Canadian Revenue Agency.  This form consists of two parts, one that must be completed by the individual, parent or guardian (on the persons behalf), and two which must be completed by a qualified practioner. 

Sometimes applying for Credits and rebates can be a frustrating and time-consuming experience.  In an effort to help you maximize your chances of receiving the Disability Tax Credit and becoming eligible for the RDSP, we have asked Doug Lagasse of Ken Lagasse Inc., Chartered Accountants to provide a guest post on the challenges of applying for the Disability Tax Credit and what you can do to increase your chances.

The Grey List
Facing the Challenges of Qualifying for Disability Tax Credits, by Doug Lagasse

The application process for Disability Tax Credits (DTC) should be simple and straightforward but like many other things in life, reality can trump expectations.  In the case of DTC applications, the best way to overcome the challenges of qualifying is to know that there are grey areas in the application process and to understand how they apply to your situation.  This article is not about what types of medical conditions qualify for a DTC, but rather to enhance your awareness of the application process and your chances of qualifying.

In many cases, where the disability is severe and is unquestionably what the tax department calls a ‘marked restriction on daily living activities’, the challenges of qualifying will be less extreme. 

This grey list is not theoretical but based on years of experience. Each topic was chosen because these were some of the repeated issues that have affected numerous applications. It is offered in the spirit that “getting it right the first time” is more important than ever.  Recent federal government initiatives that support further tax reduction possibilities (potential income splitting) and the life enhancing new Registered Disability Savings Plan are dependent on a successful DTC application. 


The effects of a prolonged medical condition that are experienced by each individual are unique and it is the effects of the condition that CRA will look at when reviewing an application.  The grey area here is, “When does a disability become severe enough to qualify for a DTC?”  How do good days and bad days matter? Does ability to work matter? How about likelihood of improvement?  What matters most, is that the description of the effects of a condition are clearly stated.

Doctors Role

Does your doctor, however well-intentioned, have a good understanding of what the tax department requires to successfully qualify a DTC applicant?  Do you?  The DTC application form (T2201) has changed numerous times in the last five years — once quite dramatically. Is your doctor up to date?  Most doctors are extremely busy and that can’t be good for their enthusiasm of completing forms.  If the application form is vague, missing information or is contradictory, the tax department will likely respond by sending a questionnaire to the doctor asking for clarification in some areas.  This should be avoided.  The modern trend of 10 minute appointments does not help doctors to fully understand the effects of a patient’s condition.  Be sure your doctor understands your condition, knows how long you have been affected and that they have all of your medical records. 

Loving the Tax Department

Each tax centre has a tendency to have different management guidelines and protocols.  As well, each officer who reviews the applications has a unique understanding of the intent of the legislation. Obviously, what that means is that the same application may be treated differently depending on whose desk it lands.  To avoid gambling with your application, make sure to pay close attention to your application process, so that the decision for them is easy to make and it is the one you want! Then you can love them too.


Regretfully, even though a medical condition may normally qualify an applicant, DTC applications can be denied because of a technicality in the application process. Certainly, CRA allows for objections that can go as far as court challenges and usually this means your doctor would be involved. However, a way to look at it sideways is to re-apply in a succeeding year. Although it is now an uphill battle, this is allowed. CRA will be aware that you have previously been turned down and they will look very closely at your application and ask, “What is different this time?”  In this scenario diligence in understanding what went wrong in the first place, will go a long way.   Professional help is likely crucial. 

The Financial Results

A successful DTC application is the most important goal, but stay focused on maximizing financial results as well.  Canada has a self assessing tax system and you must tell the tax department what to do or they may not take action. In this case, the grey area is assessing all the options of properly transferring the DTC credits (and refunds) to a family member if they cannot be used completely by the person with the disability.

Grey Advice

Like a mouse asking a cat for the best place to hide, it may not always be in your best interest to depend solely on advice from the tax department.   Calling the toll free line and asking for advice can be hit or miss.  It is not that they intend to mislead you, but different interpretations can come into play.  In other words, getting the correct answers not only depends on your questions, but whether the officer from CRA knows the right questions to ask you about your situation.  

Being Successful

The DTC is an important document.  The most productive approach is to treat it as your responsibility, not your doctors.  Always get a copy of your DTC application from your doctor or representative.  The chances of success are improved by including supporting documentation with your application.  You or your representative (not your doctor) should submit your application.   

Remember, the tax department has no choice but to focus on the details.  Since a DTC application is most often a one-time application, it can mean significant value year after year, so your interests are best served with a similar focus.  Leave as little to chance as possible.  

For more information on how to apply and receive the Disability Tax Credit you can contact Doug Lagasse at 604-629-1919 or visit

Yesterday the Regulations for the Registered Disability Savings Plan were published in Part 2 of the Canada Gazette (p.16-20). As expected there were not a lot of changes following the consultations held by the federal government in Ottawa, Montreal, Toronto and Vancouver. The one substantial change that came out of the original draft regulations was the earnings from the Grant and Bond have been removed from the assistance holdback amount.

Originally, if people withdrew early from the plan and had received a Canada Disability Savings Grant or Bond from the government, the total amount of the Grant and Bond including earnings, would be clawed back. In the final Regulations published yesterday, this need to include earnings in the assistance holdback amount has been withdrawn. The passage below is an excerpt from the Gazette which outlines this change.

“Some representatives from financial institutions expressed concern about the administrative complexity surrounding the assistance holdback amount. The Government originally proposed that the assistance holdback amount be comprised of the CDSG, CDSB and any earnings they generate. In response to concerns
raised by financial institutions regarding the difficulty in tracking earnings generated from the CDSG and CDSB, the Government removed earnings from the assistance holdback amount. In the Regulations, the assistance holdback amount will only be comprised of the CDSG and CDSB. This change is expected to ease
the administrative burden and cost for financial institutions while being less punitive for people with severe and prolonged disabilities who hold an RDSP.”

The federal government has committed to conducting a review of the RDSP in 3 years, so this isn’t the last opportunity we will have to request amendments to the Regulations.

To access the final Regulations you can click on the following link:

The Canadian Revenue Agency (CRA) has created a webpage in their site that outlines the RDSP and goes through some “Frequently Asked Questions (FAQs)”.  It is definetely worth taking a look at as it goes into some interesting questions like:

Can the holder of the plan be changed?

How does an issuer set up a disability savings plan specimen?

How does an issuer amend an approved specimen plan?

When is an RDSP no longer considered registered?

You can also download disability related forms from this site, such as the Disability Tax Credit and the Medical and Disability Related Information pamphlet which outlines most of the services and programs available for people with disabilities.

To access this site click on the link below:

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