British Columbia to Exempt Federal Registered Disability Plans When Calculating Eligibility for Provincial Disability Benefits

I wrote previously about the Federal Government's announcement in the 2007 budget to introduce Registered Disability Savings Plans ("RDSP"). These plans would allow families to contribute funds to a plan for a person with a disability. The plans allow the person with a disability to defer tax on the investment income inside the plan until he or she withdraws money. There are also matching Federal Government grants.

I wrote that

the effectiveness of this program will depend on how the various provinces treat the savings in the RDSP. For example, British Columbia's provincial disability benefits are means tested....If an RDSP, or payments from an RDSP, disqualify a person with a disability from receiving provincial disability benefits, the program will be of little or no benefit to the beneficiary.

The British Columbia Government issued a press release a couple of days ago stating that the Ministry of Employment and Income Assistance will exempt RDSPs when calculating a person's eligibility for British Columbia disability benefits. The RDSPs will not be considered in the asset test, and a person who is eligible for the provincial disability benefits may receive disbursements from an RDSP without losing any of the provincial benefits.

The press release is as follows:

The Ministry of Employment and Income Assistance will fully exempt the federal government’s Registered Disability Savings Plan when calculating clients’ eligibility for disability assistance.

British Columbians with disabilities who are eligible for the Government of Canada’s Disability Tax Credit and their families or legal guardians will be able to contribute up to a lifetime maximum of $200,000 (after tax dollars) to a Registered Disability Savings Plan before they turn 60.

The federal government has released details of proposed changes to legislation that would enable a national Registered Disability Savings Plan to be in place beginning in
2008.

The exemption by British Columbia’s Ministry of Employment and Income Assistance will allow clients and their families to keep disbursements from the Registered Disability Savings Plan on top of their regular disability assistance payments.

Further, British Columbia will exempt assets held in the Registered Disability Savings Plan when calculating clients’ eligibility for their monthly disability assistance.

The Registered Disability Savings Plan exemption is intended to encourage families and friends to save for the future needs of children and adults with severe disabilities. The exemption supports the government’s Disability Strategy and commitment to build the best system of support in Canada for persons with disabilities.

British Columbians who are eligible for the Government of Canada’s Disability Tax Credit but are not yet receiving it are encouraged to apply for it now so that they will be eligible for the new Registered Disability Savings Plan when introduced.