PLANNING FOR THE FUTURE: Province edits tax system to benefit people with disabilities

The Georgian (Stephenville, NL), no. Vol. 38 No. 15
Tuesday, April 8, 2008
PLANNING FOR THE FUTURE: Province edits tax system to benefit people with
disabilities
By Sabrina Skinner

Newfoundland and Labrador is one of two provinces to recently implement changes to their provincial tax systems, allowing families of persons with disabilities to avail of the new Registered Disability Savings Plan.

British Columbia was the first to change its provincial tax laws to allow families of people with disabilities to save money for their children without having those funds weighed against eligibility for other income support programs.

Shawn Skinner, provincial minister of human resources, labour and employment says it was important to the province to make these changes now. "We felt it allowed people to have independence, it allowed people to plan for the future, it allowed people to look after their own needs," he says.

Minister Skinner says it is his understanding that mechanisms allowing the start of a Registered Disability Savings Plan are being worked on.

Ray McIsaac, president of the Newfoundland and Labrador Association for Community Living, says he welcomes the changes. "Hopefully the leadership our government has shown on this will inspireother provinces within Atlantic Canada and throughout Canada to similarly take action so that it becomes a truly national program," he said.

The Registered Disability Savings Plan was announced in the 2007 federal budget, but each province has to specifically agree to change their own tax laws to ensure other levels of income support for persons with disabilities remain intact.

"The term we use is 'flow through,' so what the province has done has allowed the benefits of the disability programs to flow through the individuals without it being clawed back at the provincial level," says Mr. McIsaac.

The changes will make it easier for families of persons with disabilities to provide for their children after they are no longer able to provide support and care, thus enabling the children to continue to live in and be involved with the community.

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In addition, the government of Newfoundland and Labrador announced last week they will provide funding to the association to educate parents about how to set up support trusts for their disabled children.

Mr. McIsaac says these trusts can play a huge role in long term planning, as they can be set up to support children until they reach the age where their Registered Disability Savings Plans will come through, which is at the end of a ten-year vesting period.

These funds will also not be used to assess whether or not a person with a disability qualifies for income support programs.

Mr. McIsaac notes the changes as important social policy measures.

"This is an important policy move as well in getting us past the notion that you're either completely independent or you're receiving state support. And the entry fee to getting state support has historically been abject poverty," he says.

In order to provide eligible families or persons with information about these changes, the provincial government has provided the association with a grant to educate people about the programs and help them learn more about RDSP's, support trusts, and how to plan for their children's future.

Mr. McIsaac encourages people wishing to learn more about these new initiatives to call Darlene Nash at the association's St. John's office at 1-800-701-8511 to be added to a mailing list for updates and further information.

Mr. McIsaac says the association also plans to hold information sessions around the province to better educate families on how to save for their children's future.

Revenue Canada notes the plans should be available sometime in 2008.

How the RDSP works

Here's a quick look at the Registered Disability Savings Plan:

Any person who is eligible for the Disability Tax Credit and is a Canadian resident is eligible for the RDSP; or a parent or legal representative of a person who is a resident of Canada and eligible for the Disability Tax Credit;

Anyone can contribute: parents, friends, neighbours;

There is a lifetime maximum of $200,000 and contributions can be made until the end of a person's 59th year.

Grants and bonds

Also notable are the Canada Disability Savings Grant and Canada Disability Savings Bonds:

Through the Canada Disability Savings Grant program, the federal government will match contributions for 20 years at a rate of 100, 200 or 300 per cent, depending on a family's income and their contributions;

The Canada Disability Savings Bonds will be paid at a rate of $1,000 per year where a family's net income is not more than $20,883. There is a $20,000 lifetime maximum contribution.

The grant and bond programs will contribute to a person's RDSP fund until the end of their 49th year.

Source: Canada Revenue Agency and 2007 federal budget

C 2008 The Georgian (Stephenville, NL). All rights reserved.