Registered Disability Savings Plans (RDSPs)

Sample pro forma - Declaration of Trust

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Disclaimer

This sample pro forma declaration of trust is to be considered as a template that can be used by prospective RDSP issuers to develop their own declaration of trust. The wording provided in this pro forma declaration of trust is a sample of what the issuer may wish to use; however, the issuer is under no obligation to use this wording in their declaration of trust. Trust companies offering an RDSP may include further wording to accommodate other legislative requirements or their own administrative requirements, for example, Canada Disability Savings Act, Canada Disability Savings Regulations, and Securities Commission requirements may need to be added. The issuer may want to add such elements as how a successor holder is determined and the process for determining and paying Disability Assistance Payments.

The Canada Revenue Agency will not be held responsible for any inaccuracies in the wording of this document. Issuers must determine with their own legal advisers, the wording required for their own specimen plan.

This declaration of trust, together with the application, constitutes an arrangement entered into between [insert issuer name] as Issuer of the Plan and any entity (the "Holder[s]") with whom the Issuer agrees to pay or to cause to be paid Disability Assistance Paymentsⁱ to a Beneficiary. The parties agree as follows:

1 DEFINED TERMS

For the purposes of this arrangement the ensuing terms will have the following meanings:

"Applicable Legislation" means the Income Tax Act (the "ITA"), the Canada Disability Savings Act (the "CDSA" ) and its Regulations that govern this Plan, the property in this Plan, and the parties involved in this arrangement.

"Assistance Holdback Amount" has the meaning assigned under the Canada Disability Savings Regulations.

"Beneficiary" means the individual designated in the application by the Holder(s) to whom, or on whose behalf, Lifetime Disability Assistance Payments and Disability Assistance Payments shall be paid.

"Disability Assistance Payment"ⁱⁱ means any payment from the Plan to the Beneficiary or to the Beneficiary's estate.

"Disability Savings Plan" of a Beneficiary means an arrangement between the Issuer and one or more of the following:

1. the Beneficiary,
2. an entity who is a Qualifying Person in relation to the Beneficiary at the time the arrangement is entered into, and
3. a legal parent of the Beneficiary who is not a Qualifying Person in relation to the Beneficiary at the time the arrangement is entered into but is a holder of another Registered Disability Savings Plan of the Beneficiary;

under which one or more contributions are to be made in trust to the Issuer to be invested, used, or applied by the Issuer for the purpose of making payments to the Beneficiary and where the arrangement is entered into in a taxation year in respect of which the Beneficiary is eligible for the disability tax credit.

"DTC Eligible individual" means an individual who would be eligible for the disability tax credit if subsection 118.3(1) of the ITA were read without reference to paragraph 118.3(1)(c) of the ITA.

"Government Funded Benefits" means the Canada Disability Savings Grant and/or the Canada Disability Savings Bond.

"Holder" means one or more of the following:

1. an entity that has entered into the Plan with the Issuer;
2. an entity who receives rights as a successor or assignee of an entity who entered into the Plan with the Issuer; and
3. the Beneficiary, if the Beneficiary has rights under the Plan to make decisions concerning the Plan, unless the Beneficiary's only right is to request that Disability Assistance Paymentsⁱⁱⁱ be made as detailed in section 7A(b).

"Lifetime Disability Assistance Payments" means Disability Assistance Payments that, after they begin to be paid, are payable at least annually until the earlier of the>/br> day on which the Beneficiary dies and the day on which the Plan is terminated.

"Plan" means this arrangement established hereunder and known as the [insert name] Disability Savings Plan.

"Plan Trust" means the trust governed by the Plan.

"Qualifying Person" means:

If the Beneficiary has not reached the age of majority at or before the time the arrangement is entered into:

1. a legal parent of the Beneficiary;
2. a guardian, tutor, curator or other individual who is legally authorized to act on behalf of the Beneficiary; or
3. a public department, agency, or institution that is legally authorized to act on behalf of the Beneficiary.

If the Beneficiary has reached the age of majority at or before the time the arrangement is entered into but is not contractually competent to enter into the arrangement, Qualifying Person will mean an entity as described in paragraphs (ii) or (iii) of this definition.

"Registered Disability Savings Plan" means a Disability Savings Plan that satisfies the conditions of section 146.4 of the ITA.

"Specified Minister" means the Minister of Human Resources and Social Development Canada.

"Specified Year" means the particular calendar year in which a medical doctor, who is licensed to practice under the laws of a province (or the place where the Beneficiary resides), certifies in writing that, in their professional opinion, the Beneficiary is not likely to live more than five years, and each of the following five calendar years after the particular calendar year. The specified year will not include any calendar year that is prior to the calendar year in which the certification is provided to the Issuer.

2 PURPOSE OF THE PLAN

The Plan will be operated exclusively for the benefit of the Beneficiary under the Plan. The Beneficiary's designation is irrevocable and no right of the Beneficiary to receive payments from the Plan is capable of surrender or assignment.

3 REGISTRATION OF THE PLAN

The following conditions must be satisfied in order for the Plan to be considered registered:

1. before the Plan is entered into, the Issuer must receive written notification from the Minister of National Revenue that provides approval of the specimen plan under which the arrangement is based;
2. at or before the time the Plan is entered into, the Issuer must be provided with the social insurance numbers of the Beneficiary and every entity who enters into the Plan with the Issuer (in the case of an entity that is a business, their business number);
3. at the time the Plan is entered into, the Beneficiary must be resident in Canada unless the Beneficiary is currently a Beneficiary under another Registered Disability Savings Plan; and
4. the Beneficiary must be a DTC Eligible Individual in respect of the taxation year in which the Plan is opened for him/her.

The Plan will not be considered registered unless the Issuer notifies the Specified Minister of the Plan's existence in prescribed form containing prescribed information within 60 days after this arrangement is entered into.

The Plan will not be considered registered if the Beneficiary of the Plan is also the Beneficiary of another Registered Disability Savings Plan that has not been terminated within 120 days, or any later day that the Specified Minister considers reasonable in the circumstances, after the Plan is entered into.

4 CHANGES IN HOLDER

An entity may only become a successor or assignee of a Holder if the entity is:

1. the Beneficiary;
2. the Beneficiary's estate;
3. a Holder of the Plan at the time rights are acquired;
4. a Qualifying Person in relation to the Beneficiary at the time rights under the Plan are acquired; or
5. a legal parent of the Beneficiary who was previously a Holder of the Plan.

An entity may not exercise their rights as a successor or assignee of a Holder until the Issuer is advised that the entity has become a Holder of the Plan. Before exercising their rights as a successor or assignee of a Holder, the Issuer must be in receipt of the entity's social insurance number or business number, as the case may be.

If a Holder (other than a legal parent of the Beneficiary) ceases to be a Qualifying Person, he or she will also cease to be a Holder of the Plan. There must be at least one Holder of the Plan at all times and the Beneficiary or the Beneficiary's estate may automatically acquirerights as successor or assignee of a Holder in order to comply with this requirement.

5 WHO MAY BECOME A BENEFICIARY OF THE PLAN

An individual may only be designated as a Beneficiary of the Plan if the individual is resident in Canada when the designation is made, unless he or she was already a Beneficiary under another Registered Disability Savings Plan. The individual must also be a DTC Eligible Individual in respect of the taxation year in which the Plan is opened for them before designation to the Plan can take place.

An individual is not considered a Beneficiary of the Plan until the Holder designates the Beneficiary on the application by providing the Beneficiary's full name, address, social insurance number, gender, and date of birth.

6 CONTRIBUTIONS

Only the Holder may make contributions to the Plan unless they have given written consent to allow another entity to make contributions into the Plan.

Contributions may not be made into the Plan if the Beneficiary is not a DTC Eligible Individual in respect of the taxation year in which the contribution is made.

Contributions may not be made into the Plan if the Beneficiary died before that time.

A contribution may not be made into the Plan, other than as a transfer in accordance with section 8, if:

1. the Beneficiary is not resident in Canada at that time;
2. the Beneficiary turns 59 years of age before the calendar year that includes that time; or
3. the total of the contribution and all other contributions made (other than as a transfer in accordance with section 8) at or before that time to the Plan or to any other plan of the Beneficiary would exceed $200,000.

A contribution does not include Government Funded Benefits or a prescribed payment from the province in which the Beneficiary resides.

7 PAYMENTS FROM THE PLAN^iv

No payments will be made from the Plan other than:

1. the payment of Disability Assistance Payments to or for a Beneficiary of the Plan;
2. the transfer of an amount to another trust that irrevocably holds property under a Registered Disability Savings Plan of the Beneficiary, as detailed in section 8; and
3. repayments of amounts under the CDSA and its Regulations.

A Disability Assistance Payment may not be made from the Plan if the fair market value of the property held by the Plan Trust, immediately after the payment is made, would be less than the Assistance Holdback Amount in relation to the Plan.

Lifetime Disability Assistance Payments will begin no later than the end of the calendar year in which the Beneficiary turns 60 years of age. In such a case where the Plan is established after the Beneficiary turns 60 years of age, Lifetime Disability Assistance Payments will begin in the calendar year immediately following the calendar year in which the Plan is established.

Lifetime Disability Assistance Payments for a calendar year are limited to the amount determined by the formula described in paragraph 146.4(4)(l) of the ITA.

7A DISABILITY ASSISTANCE PAYMENTS

If the total amount of all Government Funded Benefits paid into this and another Registered Disability Savings Plan of the Beneficiary before the beginning of the calendar year exceeds the total amount of contributions (other than as a transfer in accordance with section 8) paid into this and another Registered Disability Savings Plan of the Beneficiary before the beginning of the calendar year, then the following conditions must be adhered to:

(a) If the calendar year is not a Specified Year for the Plan, the total amount of Disability Assistance Payments made in the year from the Plan will not exceed the amount determined by the formula in paragraph 146.4(4)(l) of the ITA in respect of the Plan for the calendar year. When calculating the total amount, a transfer as detailed in section 8 is to be disregarded if payments are made in lieu of those that should have been made under the prior plan of the Beneficiary as described in paragraph 146.4(8)(d) of the ITA. A transfer as detailed in section 8 is to be disregarded if the transfer is made in lieu of a payment that would have been permitted to be made from the other plan in the calendar year if the transfer had not occurred.

(b) If the Beneficiary has reached 27 years of age but not 59 years of age before the particular calendar year, the Beneficiary may direct that one or more Disability Assistance Payments be made from the Plan in the year provided that the total of all Disability Assistance Payments made from the plan in the year do not exceed the amount imposed by the constraints of paragraph (a) of this section. These payments may not be made from the Plan if the fair market value of the property held by the Plan Trust, immediately after the payment is made, would be less than the Assistance Holdback Amount in relation to the Plan.

(c) If the Beneficiary has reached 59 years of age before the particular calendar year, the total of all Disability Assistance Payments made from the Plan in the year, will be equal to the amount determined by the formula in paragraph 146.4(4)(l) of the ITA. If the property in the Plan Trust is insufficient to make available the required amount, a lesser amount may be paid.

8 TRANSFERS

At the direction of the Holder(s) of the Plan, the Issuer will transfer all property held by the Plan Trust directly to another Registered Disability Savings Plan of the Beneficiary.The Issuer will provide the issuer of the new plan with all information in their possession that is necessary for the new issuer to comply with the requirements of the Applicable Legislation.The Issuer will terminate the Plan immediately after completing the transfer to the new Registered Disability Savings Plan and both the termination and the transfer will be completed within 120 days of the effective date of the Beneficiary's new plan.

In addition to any other Disability Assistance Payments^v that are required to be paid to the Beneficiary in the year, if the Beneficiary is transferring an amount from another Registered Disability Savings Plan and the Beneficiary attained the age of 59 years before the calendar year in which the transfer occurs, the Plan will make one or more Disability Assistance Payments to the Beneficiary whose total will be equal to the amount by which:

1. the total amount of Disability Assistance Payments that would have been made from the prior plan in the year if the transfer had not occurred exceeds
2. the total amount of Disability Assistance Payments made from the prior plan in the year.

9 TERMINATION OF THE PLAN

After taking into consideration the Assistance Holdback Amount, any remaining amount in the Plan will be paid to the Beneficiary or to his or her estate. This amount will be paid by the end of the calendar year following the earlier of:

1. the calendar year in which the Beneficiary dies; and
2. the first calendar year throughout which the Beneficiary has no severe and prolonged impairment as described in paragraph 118.3(1)(a.1) of the ITA.

The Plan must be terminated by the end of the calendar year following the earlier of:

1. the calendar year in which the Beneficiary dies; and
2. the first calendar year throughout which the Beneficiary has no severe and prolonged impairment as described in paragraph 118.3(1)(a.1) of the ITA.

10 NON-COMPLIANCE OF THE PLAN

If either the Issuer, the Holder, or the Beneficiary of the Plan fails to comply with the requirements in respect of Registered Disability Savings Plans as set out in the Applicable Legislation or if the Plan is not administered in accordance with its terms, the Plan will be considered non-compliant and will cease to be a Registered Disability Savings Plan at that time.

At the time the Plan ceases to be registered, a Disability Assistance Payment will be deemed to have been made from the Plan to the Beneficiary or, if the Beneficiary is deceased, to their estate, that is equal to the amount by which the fair market value of the property held by the Plan Trust exceeds the Assistance Holdback Amount.

If the Plan ceases to be registered because a Disability Assistance Payment is made that results in the fair market value of the property in the plan being less than the Assistance Holdback Amount, an additional Disability Assistance Payment will also be deemed to be made from the Plan to the Beneficiary at that time which is equal to:

1. the amount by which the lesser of the Assistance Holdback Amount in relation to the Plan and the fair market value of the property held by the Plan Trust at the time of payment exceeds
2. the fair market value of the property held by the Plan Trust immediately after the payment

The non-taxable portion of this payment will be deemed to be nil.

If the requirements of the Applicable Legislation are not met, the Plan will cease to be a Registered Disability Savings Plan unless the Minister of National Revenue waives such requirements.

11 OBLIGATIONS OF THE ISSUER

The Issuer will forward notification of any change in Holder under the Plan to the Specified Minister in prescribed form containing prescribed information on or before the day that is 60 days after the later of:

1. the day on which the Issuer is advised of the change in Holder; and
2. the day on which the Issuer is provided with the social insurance number or business number of the new Holder.

The Minister of National Revenue must approve amendments to the specimen plan under which this Plan is based before the Issuer can amend the Plan terms and conditions.

If the Issuer discovers that the Plan is or will likely become non-compliant, the Issuer will notify both the Minister of National Revenue and the Specified Minister of this fact within 30 days after the Issuer becomes aware of possible or factual non-compliance.

The Issuer will 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 of the ITA in connection with the Plan.

If the Issuer fails to comply with these obligations, the Issuer is liable to penalties as set out in subsection 162(7) of the ITA.

12 RESPONSIBILITY FOR THE PLAN AND THE PLAN TRUST

The Issuer has ultimate responsibility for the administration of the Plan and the Plan Trust. Therefore, the Issuer shall ensure that the Plan and the Plan Trust are administered in compliance with the requirements of the Applicable Legislation.

13 DELEGATION OF DUTIES

If the Issuer enters into a contractual arrangement with a third party for the purpose of permitting the third party to perform administrative or other duties under the Plan, the ultimate responsibility for the Plan and the Plan Trust remains with the Issuer as detailed in section 12. The Issuer is responsible for the payment of any penalties resulting from non-compliance as detailed in section 11.

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ⁱ The offering of Disability Assistance Payments that are not Lifetim Disability Assistance Payments is not a mandatory requirement under the ITA. If the Issuer wishes to only allow Disability Assistance Payments that are Lifetime Disability Assistance Payments, please add the word "Lifetime" to the term "Disability Assistance Payments" in this paragraph".

ⁱⁱ Please note that the Issuer must include a stipulation in the declaration of trust as to whether or not Disability Assistance Payments that are not Lifetime Disability Payments are permitted to be paid from the Plan; however, the Issuer is still required to include a provision to allow Beneficiary directed Disability Assistance Payments as outlined in subparagraph 146.4(4)(n)(iii) of the Income Tax Act

ⁱⁱⁱ If the Issuer wishes to only allow Disability Assistance Payments that are Lifetime Disability Assistance Payments, please add the word "Lifetime" to the term "Disability Assisatnce Payments" in this clause.

^iv If the Issuer wishes to only allow the payment of Disability Assistance Payments that are Lifetime Assistance Payments from the plan, please add the word "Lifetime" to all references of "Disability Assistance Payment" in this section (with exception to those Beneficiary Directed Disability Assistance Payments outlined in paragraph 7A(b)).

^v If the Issuer wishes to only allow Disability Assistance Payments that are Lifetime Disability Assistance Payments, please add the word "Lifetime" to all references of "Disability Assistance Payments" in this paragraph.