Budget and Economic Statement Implementation Act, 2007 (S.C. 2007, c. 35)
Full Document:
Assented to 2007-12-14
112. The definition “adjusted income” in section 122.6 of the Act is replaced by the following:
“adjusted income”
« revenu modifié »
“adjusted income”, of an individual for a taxation year, means the total of all amounts each of which would be the income for the year of the individual or of the person who was the individual’s cohabiting spouse or common-law partner at the end of the year if no amount were included under paragraph 56(1)(q.1) or subsection 56(6) or in respect of any gain from a disposition of property to which section 79 applies in computing that income and if no amount were deductible under paragraph 60(y) or (z) in computing that income;
113. Paragraph (a) of the definition “excluded right or interest” in subsection 128.1(10) of the Act is amended by adding the following after subparagraph (iii):
(iii.1) a registered disability savings plan,
114. Paragraph 132.2(1)(k) of the Act is replaced by the following:
(k) where a share to which paragraph (j) applies would, but for this paragraph, cease to be a qualified investment (within the meaning assigned by subsection 146(1), 146.1(1) or 146.3, section 204 or subsection 205(1) as a consequence of the qualifying exchange, the share is deemed to be a qualified investment until the earlier of the day that is 60 days after the transfer time and the time at which it is disposed of in accordance with paragraph (j);
115. The Act is amended by adding the following after section 146.3:
Registered Disability Savings Plan
Marginal note:Definitions
146.4 (1) The following definitions apply in this section.
“assistance holdback amount”
« montant de retenue »
“assistance holdback amount”, in relation to a disability savings plan, has the meaning assigned under the Canada Disability Savings Act.
“contribution”
« cotisation »
“contribution” to a disability savings plan does not include (other than for the purpose of paragraph (b) of the definition “disability savings plan”) an amount paid into the plan under the Canada Disability Savings Act or a prescribed payment.
“disability assistance payment”
« paiement d’aide à l’invalidité »
“disability assistance payment”, in relation to a disability savings plan of a beneficiary, means any payment made from the plan to the beneficiary or to the beneficiary’s estate.
“disability savings plan”
« régime d’épargne- invalidité »
“disability savings plan” of a beneficiary means an arrangement
(a) between
(i) a corporation (in this section referred to as the “issuer”)
(A) that is licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as trustee, and
(B) with which the specified Minister has entered into an agreement that applies to the arrangement for the purposes of the Canada Disability Savings Act, and
(ii) one or more of the following:
(A) the beneficiary,
(B) an entity that, at the time the arrangement is entered into, is a qualifying person in relation to the beneficiary, and
(C) a legal parent of the beneficiary who, at the time the arrangement is entered into, is not a qualifying person in relation to the beneficiary but is a holder of another arrangement that is a registered disability savings plan of the beneficiary;
(b) under which one or more contributions are to be made in trust to the issuer to be invested, used or otherwise applied by the issuer for the purpose of making payments from the arrangement to the beneficiary; and
(c) that is entered into in a taxation year in respect of which the beneficiary is a DTC-eligible individual.
“DTC-eligible individual”
« particulier admissible au CIPH »
“DTC-eligible individual”, in respect of a taxation year, means an individual in respect of whom an amount is deductible, or would if this Act were read without reference to paragraph 118.3(1)(c) be deductible, under section 118.3 in computing a taxpayer’s tax payable under this Part for the taxation year.
“holder”
« titulaire »
“holder” of a disability savings plan at any time means each of the following:
(a) an entity that has, at that time, rights as an entity with whom the issuer entered into the plan;
(b) an entity that has, at that time, rights as a successor or assignee of an entity described in paragraph (a) or in this paragraph; and
(c) the beneficiary if, at that time, the beneficiary is not an entity described in paragraph (a) or (b) and has rights under the plan to make decisions (either alone or with other holders of the plan) concerning the plan, except where the only such right is a right to direct that disability assistance payments be made as provided for in subparagraph (4)(n)(iii)).
“lifetime disability assistance payments”
« paiements viagers pour invalidité »
“lifetime disability assistance payments” under a disability savings plan of a beneficiary means disability assistance payments that are identified under the terms of the plan as lifetime disability assistance payments and that, after they begin to be paid, are payable at least annually until the earlier of the day on which the beneficiary dies and the day on which the plan is terminated.
“plan trust”
« fiducie de régime »
“plan trust”, in relation to a disability savings plan, means the trust governed by the plan.
“qualifying person”
« responsable »
“qualifying person”, in relation to a beneficiary of a disability savings plan, at any time, means
(a) if the beneficiary has not, at or before that time, attained the age of majority, an entity that is, at that time,
(i) a legal parent of the beneficiary,
(ii) a guardian, tutor, curator or other individual who is legally authorized to act on behalf of the beneficiary, or
(iii) a public department, agency or institution that is legally authorized to act on behalf of the beneficiary, and
(b) if the beneficiary has, at or before that time, attained the age of majority and is not, at that time, contractually competent to enter into a disability savings plan, an entity that is, at that time, an entity described in subparagraph (a)(ii) or (iii).
“registered disability savings plan”
« régime enregistré d’épargne- invalidité »
“registered disability savings plan” means a disability savings plan that satisfies the conditions in subsection (2), but does not include a plan to which subsection (3) or (10) applies.
“specified Minister”
« ministre responsable »
“specified Minister” means the minister designated under section 4 of the Canada Disability Savings Act.
“specified year”
« année déterminée »
“specified year” for a disability savings plan of a beneficiary means the particular calendar year in which a medical doctor licensed to practice under the laws of a province (or of the place where the beneficiary resides) certifies in writing that the beneficiary’s state of health is such that, in the professional opinion of the medical doctor, the beneficiary is not likely to survive more than five years, and each of the five calendar years following the particular calendar year, but does not include any calendar year prior to the calendar year in which the certification is provided to the issuer of the plan.
Marginal note:Registered status
(2) The conditions that must be satisfied for a disability savings plan of a beneficiary to be a registered disability savings plan are as follows:
(a) before the plan is entered into, the issuer of the plan has received written notification from the Minister that, in the Minister’s opinion, a plan whose terms are identical to the plan would, if entered into by entities eligible to enter into a disability savings plan, comply with the conditions in subsection (4);
(b) at or before the time the plan is entered into, the issuer of the plan has been provided with the Social Insurance Number of the beneficiary and the Social Insurance Number or business number, as the case may be, of each entity with which the issuer has entered into the plan; and
(c) at the time the plan is entered into, the beneficiary is resident in Canada, except that this condition does not apply if, at that time, the beneficiary is the beneficiary under another registered disability savings plan.
Marginal note:Registered status nullified
(3) A disability savings plan is deemed never to have been a registered disability savings plan if
(a) the issuer of the plan has not, on or before the day that is 60 days after the particular day on which the plan was entered into, provided notification of the plan’s existence in prescribed form containing prescribed information to the specified Minister; or
(b) the beneficiary was, on the particular day, the beneficiary under another registered disability savings plan and that other plan has not been terminated on or before the day that is 120 days after the particular day or any later day that the specified Minister considers reasonable in the circumstances.
Marginal note:Plan conditions
(4) The conditions referred to in paragraph (2)(a) are as follows:
(a) the plan stipulates
(i) that it is to be operated exclusively for the benefit of the beneficiary under the plan,
(ii) that the designation of the beneficiary under the plan is irrevocable, and
(iii) that no right of the beneficiary to receive payments from the plan is capable, either in whole or in part, of surrender or assignment;
(b) the plan allows an entity to acquire rights as a successor or assignee of a holder of the plan only if the entity is
(i) the beneficiary,
(ii) the beneficiary’s estate,
(iii) a holder of the plan at the time the rights are acquired,
(iv) a qualifying person in relation to the beneficiary at the time the rights are acquired, or
(v) an individual who is a legal parent of the beneficiary and was previously a holder of the plan;
(c) the plan provides that, where an entity (other than a legal parent of the beneficiary) that is a holder of the plan ceases to be a qualifying person in relation to the beneficiary at any time, the entity ceases at that time to be a holder of the plan;
(d) the plan provides for there to be at least one holder of the plan at all times that the plan is in existence and may provide for the beneficiary (or the beneficiary’s estate, as the case may be) to automatically acquire rights as a successor or assignee of a holder in order to ensure compliance with this requirement;
(e) the plan provides that, where an entity becomes a holder of the plan after the plan is entered into, the entity is prohibited (except to the extent otherwise permitted by the Minister or the specified Minister) from exercising their rights as a holder of the plan until the issuer has been advised of the entity having become a holder of the plan and been provided with the entity’s Social Insurance Number or business number, as the case may be;
(f) the plan prohibits contributions from being made to the plan at any time if
(i) the beneficiary is not a DTC-eligible individual in respect of the taxation year that includes that time, or
(ii) the beneficiary died before that time;
(g) the plan prohibits a contribution from being made to the plan (other than as a transfer in accordance with subsection (8)) at any time if
(i) the beneficiary attained the age of 59 years before the calendar year that includes that time,
(ii) the beneficiary is not resident in Canada at that time, or
(iii) the total of the contribution and all other contributions made (other than as a transfer in accordance with subsection (8)) at or before that time to the plan or to any other registered disability savings plan of the beneficiary would exceed $200,000;
(h) the plan prohibits contributions to the plan by any entity that is not a holder of the plan, except with the written consent of a holder of the plan;
(i) the plan provides that no payments may be made from the plan other than
(i) disability assistance payments,
(ii) a transfer in accordance with subsection (8), and
(iii) repayments under the Canada Disability Savings Act;
(j) the plan prohibits a disability assistance payment from being made if it would result in the fair market value of the property held by the plan trust immediately after the payment being less than the assistance holdback amount in relation to the plan;
(k) the plan provides for lifetime disability assistance payments to begin to be paid no later than the end of the particular calendar year in which the beneficiary attains the age of 60 years or, if the plan is established in or after the particular year, in the calendar year following the calendar year in which the plan is established;
(l) the plan provides that the total amount of lifetime disability assistance payments made in any calendar year (other than a specified year for the plan) shall not exceed the amount determined by the formula
A/(B + 3 - C) + D
where
- A
- is the fair market value of the property held by the plan trust at the beginning of the calendar year (other than annuity contracts held by the plan trust that, at the beginning of the calendar year, are not described in paragraph (b) of the definition “qualified investment” in subsection 205(1)),
- B
- is the greater of 80 and the age in whole years of the beneficiary at the beginning of the calendar year,
- C
- is the age in whole years of the beneficiary at the beginning of the calendar year, and
- D
- is the total of all amounts each of which is
(i) a periodic payment under an annuity contract held by the plan trust at the beginning of the calendar year (other than an annuity contract described at the beginning of the calendar year in paragraph (b) of the definition “qualified investment” in subsection 205(1)) that is paid to the plan trust in the calendar year, or
(ii) if the periodic payment under such an annuity contract is not made to the plan trust because the plan trust disposed of the right to that payment in the calendar year, a reasonable estimate of that payment on the assumption that the annuity contract had been held throughout the calendar year and no rights under the contract were disposed of in the calendar year;
(m) the plan stipulates whether or not disability assistance payments that are not lifetime disability assistance payments are to be permitted under the plan;
(n) the plan provides that when the total of all amounts paid under the Canada Disability Savings Act before the beginning of a calendar year to any registered disability savings plan of the beneficiary exceeds the total of all contributions made (other than as a transfer in accordance with subsection (8)) before the beginning of the calendar year to any registered disability savings plan of the beneficiary,
(i) if the calendar year is not a specified year for the plan, the total amount of disability assistance payments made from the plan to the beneficiary in the calendar year shall not exceed the amount determined by the formula set out in paragraph (l) in respect of the plan for the calendar year, except that, in calculating that total amount, any payment made following a transfer in the calendar year from another plan in accordance with subsection (8) is to be disregarded if it is made
(A) to satisfy an undertaking described in paragraph (8)(d), or
(B) in lieu of a payment that would otherwise have been permitted to be made from the other plan in the calendar year had the transfer not occurred,
(ii) if the beneficiary attained the age of 59 years before the calendar year, the total amount of disability assistance payments made from the plan to the beneficiary in the calendar year shall not be less than the amount determined by the formula set out in paragraph (l) in respect of the plan for the calendar year (or such lesser amount as is supported by the property of the plan trust), and
(iii) if the beneficiary attained the age of 27 years, but not the age of 59 years, before the calendar year, the beneficiary has the right to direct that, within the constraints imposed by subparagraph (i) and paragraph (j), one or more disability assistance payments be made from the plan to the beneficiary in the calendar year;
(o) the plan provides that, at the direction of the holders of the plan, the issuer shall transfer all of the property held by the plan trust (or an amount equal to its value) to another registered disability savings plan of the beneficiary, together with all information in its possession that may reasonably be considered necessary for compliance, in respect of the other plan, with the requirements of this Act and with any conditions and obligations imposed under the Canada Disability Savings Act; and
(p) the plan provides for any amounts remaining in the plan (after taking into consideration any repayments under the Canada Disability Savings Act) to be paid to the beneficiary or the beneficiary’s estate, as the case may be, and for the plan to be terminated, by the end of the calendar year following the earlier of
(i) the calendar year in which the beneficiary dies, and
(ii) the taxation year in respect of which the beneficiary ceases to be a DTC-eligible individual.
Marginal note:Trust not taxable
(5) No tax is payable under this Part by a trust on the taxable income of the trust for a taxation year if, throughout the period in the year during which the trust was in existence, the trust was governed by a registered disability savings plan, except that
(a) tax is payable under this Part by the trust on its taxable income for the year if the trust has borrowed money
(i) in the year, or
(ii) in a preceding taxation year and has not repaid it before the beginning of the year; and
(b) if the trust is not otherwise taxable under paragraph (a) on its taxable income for the year and, at any time in the year, it carries on one or more businesses or holds one or more properties that are not qualified investments (as defined in subsection 205(1)) for the trust, tax is payable under this Part by the trust on the amount that its taxable income for the year would be if it had no incomes or losses from sources other than those businesses and properties, and no capital gains or losses other than from dispositions of those properties, and for this purpose,
(i) “income” includes dividends described in section 83, and
(ii) paragraphs 38(a) and (b) are to be read as if the fraction set out in each of those paragraphs were replaced by the word “all”.
Marginal note:Taxation of disability assistance payments
(6) Where a disability assistance payment is made from a registered disability savings plan of a beneficiary, the amount, if any, by which the amount of the payment exceeds the non-taxable portion of the payment shall be included,
(a) if the beneficiary is alive at the time the payment is made, in computing the beneficiary’s income for the beneficiary’s taxation year in which the payment is made; and
(b) in any other case, in computing the income of the beneficiary’s estate for the estate’s taxation year in which the payment is made.
Marginal note:Non-taxable portion of disability assistance payment
(7) The non-taxable portion of a disability assistance payment made at a particular time from a registered disability savings plan of a beneficiary is the lesser of the amount of the disability assistance payment and the amount determined by the formula
A × B/C
where
- A
- is the amount of the disability assistance payment;
- B
- is the amount, if any, by which
(a) the total of all amounts each of which is the amount of a contribution made before the particular time to any registered disability savings plan of the beneficiary (other than as a transfer in accordance with subsection (8))
exceeds
(b) the total of all amounts each of which is the non-taxable portion of a disability assistance payment made before the particular time from any registered disability savings plan of the beneficiary; and
- C
- is the amount by which the fair market value of the property held by the plan trust immediately before the payment exceeds the assistance holdback amount in relation to the plan.
Marginal note:Transfer of funds
(8) An amount is transferred from a registered disability savings plan (in this subsection referred to as the “prior plan”) of a beneficiary in accordance with this subsection if
(a) the amount is transferred directly to another registered disability savings plan (in this subsection referred to as the “new plan”) of the beneficiary;
(b) the prior plan is terminated immediately after the transfer;
(c) the issuer of the prior plan provides the issuer of the new plan with all information in its possession concerning the prior plan as may reasonably be considered necessary for compliance, in respect of the new plan, with the requirements of this Act and with any conditions and obligations imposed under the Canada Disability Savings Act; and
(d) where the beneficiary attained the age of 59 years before the calendar year in which the transfer occurs, the issuer of the new plan undertakes to make (in addition to any other disability assistance payments that would otherwise have been made from the new plan in the year) one or more disability assistance payments from the plan in the year, the total of which is equal to the amount, if any, by which
(i) the total amount of disability assistance payments that would have been required to be made from the prior plan in the year if the transfer had not occurred
exceeds
(ii) the total amount of disability assist-ance payments made from the prior plan in the year.
Marginal note:No income inclusion on transfer
(9) An amount transferred in accordance with subsection (8) is not, solely because of that transfer, to be included in computing the income of any taxpayer.
Marginal note:Non-compliance — cessation of registered status
(10) Where, at any particular time, a registered disability savings plan is non-compliant as described in subsection (11),
(a) the plan ceases, as of the particular time, to be a registered disability savings plan (other than for the purposes of applying, as of the particular time, this subsection and subsection (11));
(b) a disability assistance payment is deemed to have been made from the plan at the time (in this subsection referred to as the “relevant time”) immediately before the particular time to the beneficiary under the plan (or, if the beneficiary is deceased at the relevant time, to the beneficiary’s estate), the amount of which payment is equal to the amount, if any, by which
(i) the fair market value of the property held by the plan trust at the relevant time
exceeds
(ii) the assistance holdback amount in relation to the plan; and
(c) if the plan is non-compliant because of a payment that is not in accordance with paragraph (4)(j), a disability assistance payment is deemed to have been made from the plan at the relevant time (in addition to the payment deemed by paragraph (b) to have been made) to the beneficiary under the plan (or, if the beneficiary is deceased at the relevant time, to the beneficiary’s estate)
(i) the amount of which payment is equal to the amount by which the lesser of
(A) the assistance holdback amount in relation to the plan, and
(B) the fair market value of the property held by the plan trust at the relevant time
exceeds
(C) the fair market value of the property held by the plan trust immediately after the particular time, and
(ii) the non-taxable portion of which is deemed to be nil.
Marginal note:Non-compliance
(11) A registered disability savings plan is non-compliant
(a) at any time that the plan fails to comply with a condition in subsection (4);
(b) at any time that there is a failure to administer the plan in accordance with its terms (other than those terms which the plan is required by subparagraph (4)(a)(i) to stipulate); and
(c) at any time that a person fails to comply with a condition or an obligation imposed, with respect to the plan, under the Canada Disability Savings Act, and the specified Minister has notified the Minister that, in the specified Minister’s opinion, it is appropriate that the plan be considered to be non-compliant because of the failure.
Marginal note:Non-application of subsection (11)
(12) Where a registered disability savings plan would otherwise be non-compliant at a particular time because of a failure described in paragraph (11)(a) or (b),
(a) the Minister may waive the application of the relevant paragraph with respect to the failure, if it is just and equitable to do so;
(b) the Minister may deem the failure to have occurred at a later time;
(c) if the failure consists of the making of a contribution that is prohibited under any of paragraphs (4)(f) to (h), an amount equal to the amount of the contribution has been withdrawn from the plan within such period as is specified by the Minister and the Minister has approved the application of this paragraph with respect to the failure,
(i) the contribution is deemed never to have been made, and
(ii) the withdrawal is deemed not to be a disability assistance payment and not to be in contravention of the condition in paragraph (4)(i); or
(d) if the failure consists of the plan not being terminated as required under paragraph (4)(p) and was due either to the issuer not being aware of the beneficiary having died or having ceased to be a DTC-eligible individual or to some uncertainty as to the beneficiary having ceased to be a DTC-eligible individ-ual, the Minister may specify a later date by which it is reasonable to assume that the plan can be terminated in an orderly manner and, for the purposes of paragraphs (11)(a) and (b), paragraph (4)(p) and the plan terms are to be read as though they required the plan to be terminated by that date.
Marginal note:Obligations of issuer
(13) The issuer of a registered disability savings plan shall,
(a) where an entity becomes a holder of the plan after the plan is entered into, so notify the specified Minister in prescribed form containing prescribed information on or before the day that is 60 days after the later of
(i) the day on which the issuer is advised of the entity having become a holder of the plan, and
(ii) the day on which the issuer is provided with the new holder’s Social Insurance Number or business number, as the case may be;
(b) not amend the plan before having received notification from the Minister that, in the Minister’s opinion, a plan whose terms are identical to the amended plan would, if entered into by entities eligible to enter into a disability savings plan, comply with the conditions in subsection (4);
(c) where the issuer becomes aware that the plan is, or is likely to become, non-compliant (determined without reference to paragraph (11)(c) and subsection (12)), notify the Minister and the specified Minister of this fact on or before the day that is 30 days after the day on which the issuer becomes so aware; and
(d) exercise the care, diligence and skill of a reasonably prudent person to minimize the possibility that a holder of the plan may become liable to pay tax under Part XI in connection with the plan.
- Date modified: