FEDERAL BUDGET SUMMARY – 2019
REGISTERED DISABILITY SAVINGS PLAN – CESSATION OF ELIGIBILITY FOR DTC
Currently, when a beneficiary of a registered disability savings plan (RDSP) ceases
to be eligible for the disability tax credit (DTC), no contributions may be made to,
and no Canada Disability Savings Grants and Canada Disability Savings Bonds may
be paid into, the RDSP. The rules generally require that the RDSP be closed by the
end of the year following the first full year throughout which the beneficiary is not
eligible for the DTC.
Budget 2019 proposes to remove the time limitation on the period that an RDP
may remain open after a beneficiary becomes ineligible for the DTC and to
eliminate the requirement for medical certification that the beneficiary is likely to
become eligible for the DTC in the future in order for the plan to remain open. The
general rules that currently apply in respect of a period during which an election is
valid will apply to an RDSP in any period during which the beneficiary is ineligible
for the DTC, subject to certain modifications.
This measure will apply after 2020. However, an RDSP issuer will not be required
to close an RDSP on or after March 19, 2019 and before 2021 solely because the
RDSP beneficiary is no longer eligible for the DTC.
CANADA WORKERS BENEFIT
Budget 2019 introduces an amendment to clarify that an individual may be
considered to be the parent of a child in their care for the purpose of the Canada
Workers Benefit, regardless of whether they receive financial assistance from a
government under a kinship and close-relationship care program. Kinship care
providers will thus be eligible for the Canada Workers Benefit amount available for
families, provided all other eligibility requirements are met.
Also proposed was an amendment to clarify that financial assistance payments
received by care providers under a kinship care program are neither taxable, nor
included in income for the purposes of determining entitlement to income-tested
benefits and credits.
Both amendments will apply for the 2009 (due to 10-year limitations under
taxpayer fairness provisions) and subsequent taxation years.
MNP INSIGHT: To recognize that life expectancy has increased for
Canadians, the ALDA allows a limited deferral of withdrawals to age 85. It is
unclear whether this will have a material impact on the early depletion of