RDSP anti-avoidance

Anti-Avoidance Rules For Registered Disability Savings Plan (RDSP)

In the 2017 Federal Budget, there are a number of proposals that could impact the financial, tax and estate planning of Canadian. For families with disabilities, there is an improvement when applying for the Disability Tax Credit. Here’s the update about the Disability Tax Credit: http://samuelconsultant.com/disability-tax-credit-2017-update/

Also, the anti-avoidance rule will also be extended to the Registered Disability Savings Plan (RDSP). A number of anti-avoidance rule exists for other tax-assisted registered plans (i.e.: Registered Retirement Savings Plan (RRSP), Registered Retirement Income Funds (RRIF), Tax Free Savings Account (TFSA) to ensure that the plans do not provide excessive tax advantages unrelated to their respective basic objectives. To improve the consistency of the tax rules that apply to investments held by registered plans, Budget 2017 proposes to extend the anti-avoidance rules to the Registered Disability Savings Plan (RDSP) and Registered Education Savings Plan (RESP). These include:

  • The prohibited investment rules, which generally ensure that the investments held by a registered plan are arm’s length “portfolio” investments and
  • The non-qualified investment rules, which restrict the classes of investments that may be held by a registered plan
  • The advantage rules, which help prevent the exploitation of the tax attributes of a registered plan (i.e.: by shifting returns from a taxable investment to a registered plan)

 

To help you better understand about these rules, here is a short video clip from Debbie Pearl-Weinberg, executive director, Tax & Estate Planning, CIBC Wealth Strategies Group.

(Screenshot from the Investment Executive’s Website)

Click Here To Watch The Video

The good news is if you are our client, that we are managing for your RDSP account, then you should feel relief as we always make sure that you have eligible investments within your RDSP. However, if you are not yet our clients, but want us to review over your RDSP, I also welcome you to contact us.

 


Disclaimer: 

This post is for general information only, should not be construed to be legal or tax advice, as everyone’s situation is different. Please consult your own legal and tax advisor. Image courtesy of nenetus at FreeDigitalPhotos.net

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