22 october 2007 Advisor’s EdgE rEport www.advisor.ca

The federal government has re-leased draft legislation for the Registered Disability Savings Plan (RDSP).

The new tax shelter was first an-nounced in the 2007 budget based upon recommendations from a December 2006 report from the Expert Panel on Financial Security for Children with Severe Disabili-ties.

The rules for RDSPs are com-plicated, notes Jamie Golombek,

vice-president of taxation and estate planning for AIM Tri-mark.

According to the draft legisla-tive proposals, the lifetime limit for RDSP contributions will be $200,000 and the tax shelter will become available in 2008. How-ever, what will make these plans really attractive is the grant pro-gram. Under the new measure, individuals who qualify for the disability tax credit, or their par-

ents or other legal guardian, will be able to establish an RDSP. RDSPs will be eligible to receive payments from the new Can-ada Disability Savings Grants (CDSGs) and, for low and mod-est-income beneficiaries, Canada Disability Savings Bonds (CDS-Bs). Golombek explains that in order to take advantage of the

tax shelter and the grants, people need to be aware of the defini-tion of family income.

If a disabled person is under 18, the family income is defined as the parent’s income. As soon as the person reaches the age of 18 – which is the statutory age for the Income Tax Act – then a disabled person’s own family income is used. If that person (and their family) earns less than $74,000 a year, they are eligible for the maximum federal gov-ernment matching grant – which equals 300% on the first $500 and 200% on the next $1,000 of annual contributions. That equates to a personal contribu-

tion of $1,500 with the govern-ment contributing an additional $3,500 for a total of $5,000 a year. This matching grant is available for 20 years for a life-time limit of $70,000.

For really low income families – those making $21,000 or less, with a clawback between $21,000 to $37,000 – the government will also offer a savings bond of an-other $1,000 a year for a total of 20 years.

“There are big assets here,” says Golombek. “There are $200,000 in contributions, $70,000 in grants and $20,000 in bonds. That’s $290,000 be-fore any type of growth or earn-ings. These are great vehicles for people with disabled children or disabled relatives who want to save for their future. I think this is a positive development for our industry.”

The major issue, still to be de-termined, is whether or not the RDSP assets and withdrawals will impact disability benefits. To date, any withdrawals from an RDSP will not be included for the pur-poses of calculating Old Age Se-curity or Employment Insurance clawbacks at the federal level. The provinces, however, have yet to an-nounce their decision on whether or not RDSP will be considered income for those receiving disabil-ity benefits.

According to the draft legisla-tive proposals, the lifetime limit for RDSP contributions will be $200,000 and the tax shelter will become available in 2008 and is available to beneficiaries at the end of the year they turn 59. To maximize deferral of investment income, families could deposit $200,000 right at the start of 2008, or take advantage of the annual matching grants and sav-ings bonds.

“I speak to advisors across Can-ada and every single advisor that I’ve ever spoken to has at least one or two families with someone that is disabled and qualifies for the disability tax credit,” Golombek adds. “The simple idea is that the growth and the earnings are sim-ply tax-deferred and the tax, when it comes out, is paid by the ben-eficiary. Anyone in the community can contribute. If a plan is opened by a parent, the whole community can contribute to that same plan: grandparents, uncles, aunts, every-one.”

“The legislative proposals be-ing released today are an impor-tant step towards helping persons with severe disabilities, and their families, save for their financial future,” finance minister Jim Fla-herty explained. Aer

New tax Shelter Helpsdisabled will benefit from rdsp by romANA KiNg

the major issue, still to be determined, is whether or not the rdsp assets and withdrawals will impact disability benefits.

*Handset price eligible with 3-year term on a minimum $75 voice and e-mail package. Edit functionality on Windows Mobile 6 Professional or Pocket PC devices only. Windows Mobile services require an activation of a Windows Mobile powered device on the Rogers Wireless network and an e-mail plan subscription. Screen shots may not be exactly as shown. †Most reliable network claim refers to call clarity and dropped calls test results as conducted by Rogers and a recognized third-party research company in the majority of urban Canadian centres within the Rogers Wireless GSM footprint, comparing voice services of other major wireless providers. The HTC S621 operates on the Rogers GSM network. Other devices shown operate on the Rogers HSPA network. Microsoft, Excel, Explorer, Outlook, PowerPoint, Windows Mobile, the Microsoft logo and Windows Mobile logo are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries. All other brand names and logos are trademarks of their respective owners. TMTrademarks of Rogers Communications Inc., used under license. © 2007 Rogers Wireless.

Now access and edit Microsoft® Offi ce documents with Windows Mobile.® Make the most of your time anywhere, anytime.

FIVE REASONS NOT TOGO BACK TO THE OFFICE.OUTLOOK.® WORD. EXCEL.® EXPLORER.® POWERPOINT.®

Windows Mobile® powered devices starting from

$14999*

HTC S621 Motorola Q9h Palm Treo 750

Studio

Type Mgr.

Proofreader

Print Mgr.

Art Director

Copywriter

Creative Dir.

Acct. Mgmt.

Client

BY DATE

PRODUCTION NOTESArt Director:Copywriter:

Print Mgr:Color/B&W:

Fonts:

LASER%

Typesetting: Optic Nerve

This advertisement prepared by PUBLICIS

APPROVALS

• IMAGES ARE LINKED TO HIRES• IMAGES ARE VECTOR BASED

RELEASE DATE: 09/27/07ALL ‘AV’ SIZES

ROGERSMAGAZINE CAMPAIGNRGW 07 1370

FIVE REASONS...ALL 1370 ‘AV’ SIZES AS PER IO

7" X 10"7.875" X 10.75"8.5" X 11"

L. LONGMAND. FORBESC. RUDY/M. GOSS4CARIAL; BERKELEY; FRUTIGER

LAYOUT

0REVs

2

4

Date:Designer/Studio Artist:

SEP 26, 2007

JM/KB/DC

AD NUMBER:

RGW_07_M_1370_AV

Client:Project:

Docket No.:

Title:Pubs:

Live:Trim:

Bleed:

rogers.com/windowsmobile 1.866.433.1920CANADA’S MOST RELIABLE NETWORK†

RGW_07_M_1370_AXX_R1.indd 1 9/28/07 12:30:30 PM

AER10_OFC-026.indd 22 10/10/2007 07:19:02 PM