New deadline means RDSPs could actually help – living/disabilities – New deadline means RDSPs could actually help
January 17, 2009.   Helen Henderson

Families coping with disabilities are used to fighting through thick and thin. So they are unlikely to be surprised by the irony that a move to help them build a more secure future kicks in during the thinnest economic times Canadians have seen in many years.

Back in 2007, when the country’s future looked a tad rosier, Finance Minister Jim Flaherty promised to introduce a Registered Disability Savings Plan (RDSP). Family and friends would be able to contribute a lifetime total of up to $200,000 toward the long-term financial security of Canadians with “severe” disabilities, Flaherty announced.

Grants and bonds would be available annually to help build contributions and families with no cash at all to spare would be given assistance even if they couldn’t afford to contribute.

But even without the souring economy, there was the proverbial fly in the ointment.

When the disability savings plan finally came into effect on Dec. 1, 2008, it was another three weeks – Dec. 22, to be exact – before BMO Bank of Montreal billed itself as the first bank to offer it alongside Ottawa’s new tax-free savings accounts and the more familiar Registered Education Savings Plans and Registered Retirement Savings Plans.

With the holiday season in full swing, families had precious little time to get it together if they wanted to be eligible for the 2008 grants and bonds. Something had to be done – and it was.

The application period for 2008 RDSP grants and bonds has been extended through March 2 this year. Just one of a number of refreshing signals that, when it comes to disability savings plans, both Ottawa and Queen’s Park are laying aside traditional one-upmanship to help families struggling to cope.

Contributions to RDSPs are not tax-deductible but they will not be counted as income for the people with disabilities they are designed to help.

That’s a huge step forward, because both the feds and the provinces have a long history of clawing back any additional money scraped together to try to make life a little easier for disabled people.

If parents try to contribute to the living expenses of disabled offspring in Ontario, for example, an equal amount is immediately deducted from support payments. The absolute maximum disability support payment in this province is now $1,020 a month. Most people get far less. So a disabled son or daughter struggling to get by on, say, $700 a month in support payments would simply see that cut to $600 if mom and dad managed to kick in $100.

Money conferred through a disability savings plan, however, will be treated differently, a fact that has not gone unnoticed by advocates who have fought long and hard to bring about change.

The move was welcomed by the Planned Lifetime Advocacy Network, the not-for-profit group that has led the battle for an RDSP. And Community Living Ontario issued a news release as soon as the news was out.

“Clawback exemptions are a positive step in reducing poverty experienced by people who have an intellectual disability,” it said.

Added Gordon Kyle, director of social policy and government relations: “We see the exemptions as a positive first step in reducing the poverty experienced by the majority of Ontarians who have an intellectual disability.”

We can only hope that this is the start of a new wave of co-operation in which the needs of the most vulnerable people are finally recognized as more important than political brinksmanship.

Once someone is deemed eligible for an RDSP, anyone can put money into the fund up to the $200,000 lifetime maximum. Contributions are not limited to family members.

Depending on the contributions and the income of the beneficiary’s family, Ottawa may offer a grant of up to $3 for every $1 contributed, up to a maximum of $3,500 a year. Contributions made on or before March 2, 2009 will be considered for 2008 grants.

Some families also may be eligible for a Canada Disability Savings Bond. That means Ottawa could contribute up to $1,000 annually to an RDSP, even if a family itself could not afford contributions.

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