A day after the first registered disability savings plan became available to the Canadian public, the federal government has offered a Christmas bonus to eligible families: an extra two months to make contributions for the 2008 tax year.

Speaking in Toronto on Tuesday, Finance Minister Jim Flaherty announced that the government was extending the deadline for 2008 contributions into the new types of accounts until March 2, 2009.

The announcement comes after the Bank of Montreal became the first financial institution to offer RDSPs on Monday, which, without an extension, would have left just over one week for families to register the accounts and make contributions in 2008.

“This will give families added flexibility to get their RDSP started, and beginning accumulating benefits immediately,” Flaherty said.

The RDSP is a tax-assisted savings plan that allows funds to be invested tax-free until withdrawal, and is open to any individual that is eligible for the Disability Tax Credit in Canada. A maximum lifetime amount of $200,000 can be contributed to the plans, which Flaherty calls “a substantial sum for most families.”

Roughly 280,000 families across Canada will be eligible for the plan, according to the federal government.

The government also established two corresponding programs to assist eligible families to save: the Canada Disability Savings Grant, which can provide families with federal contributions up to $3,500 per year, and the Canada Disability Savings Bond, which offers low-income families up to $1,000 per year.

These initiatives address a key concern among many families caring for individuals with disabilities: financial challenges, said Diane Finley, Minister of Human Resources and Skills Development. “Most often, I hear about them having troubles making ends meet,” she said in Toronto on Tuesday. “We want to help parents and families that care for people with disabilities to save for the long-term security of their loved ones.”

The launch of the RDSP came nearly two years after the federal government first announced it as part of the 2007 budget.

“It does take, sometimes, an extraordinarily long period of time, especially with respect to a tax program like this,” Flaherty said, explaining that the public policy development process was time consuming.

On the day of the launch, BMO received roughly 600 calls about the new type of account, according to Tom Flynn, executive vice-president and chief risk officer of BMO Financial Group. He said the new account is a significant initiative for families with disabled children.

“Being able to save and accumulate money in tax-sheltered vehicles will help to improve the quality of life for people with disabilities across the country,” Flynn said.

Flaherty praised BMO for being the first financial institution to offer the plan, and urged others to follow suit.

“I would like to see more of our financial institutions participate and make RDSPs available,” Flaherty said.

Planned Lifetime Advocacy Network, the non-profit organization that proposed, researched, and campaigned for the RDSP, has also received many inquiries about the new account. Most questions relate to where families can sign up for an account, according to executive director Jack Styan.

He called the RDSP one of the most significant disability initiatives in a long time.

“For families, it means security for the future,” Styan said. “With the RDSP we think they have an easy-to-use tool for financial planning.”

IE