Feds aim to make RESPs, RDSPs more accessible

The Canada Learning Bond and Canada Education Savings Grant are contributions that the Government of Canada makes to RESPs to help Canadians save for a child’s post-secondary education. The Canada Learning Bond, specifically, aims to provides assistance to low-income families.

However, the government has determined that many families are facing barriers in accessing this program. In 2015, only one-third of eligible children received the Canada Learning Bond, according to the government.

In last year’s federal budget, the government announced plans to launch a pilot project to explore new ways to increase awareness of the program and reduce barriers to access.

Building on that measure, Budget 2018 reveals that the government is working with the province of Ontario to integrate RESP referrals into the Ontario online birth registration service.

That will enable parents to open an RESP at the same time as they apply for other services under the Ontario online birth registration service. Once an RESP is open, eligible children may begin to receive the Canada Learning Bond to help support future studies at a trade school, college or university, or in an apprenticeship program — without any contributions required by their parents or others.

This initiative aims to help more children from low-income families access the Canada Learning Bond.

With respect to RDSPs, Budget 2018 extends a temporary measure the government previously introduced, which helps individuals setup RDSPs in cases in which the capacity of the individual to enter into a contract is in doubt.

Specifically, the Income Tax Act requires that in cases in which the capacity of the individual is in doubt, the plan holder of the individual’s RDSP be that individual’s legal representative, as recognized under provincial or territorial law.

However, establishing a legal guardian or other representative can be a lengthy and expensive process. Although some provinces and territories have instituted streamlined processes that allow for the appointment of a trusted person to manage resources on behalf of an adult who lacks contractual capacity, others require more time to develop such a process.

As a result, a temporary federal measure exists to allow a qualifying family member, such as a parent or spouse, to be the plan holder of the individual’s RDSP in cases in which the individual doesn’t have a legal representative in place

That measure was legislated to expire at the end of 2018, however Tuesday’s budget proposes to extend the temporary measure by five years, to the end of 2023.

Under the proposed measure, a qualifying family member who becomes a plan holder before the end of 2023 could remain the plan holder after 2023.

The measure aims to give provinces and territories more time to implement more permanent solutions to address RDSP legal representation issues.