Sample pro forma - Declaration of Trust

This declaration of trust, together with the application, plus any addendum that forms part of the application, constitutes an arrangement entered into between [insert issuer name] as issuer of this plan and any entity (the holder[s]) with whom the issuer agrees to pay or to cause to be paid disability assistance payments ^{Footnote 1}  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 (ITA), the Canada Disability Savings Act (CDSA) and the Canada Disability Savings Regulations (CDSR) 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 CDSR.

Beneficiary means the individual designated in the application by the holder(s) to whom disability assistance payments and lifetime disability assistance payments are paid.

Designated provincial program means a program that supports savings in RDSPs and that is established under the laws of a province.

Disability assistance payment ^{Footnote 2}  means any payment from this 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;
3. a qualifying family member in relation to the beneficiary, who was the holder of the beneficiary’s previous registered disability savings plan - if this plan is opened as a result of a transfer from the previous registered disability savings plan ^{Footnote 3} ; and
4. 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. The beneficiary does not have to be eligible for the disability tax credit if this plan was opened because of a transfer from the beneficiary's prior RDSP.

DTC–eligible individual means an individual who would be eligible for the disability tax credit (DTC) 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 this plan with the issuer;
2. an entity who receives rights as a successor or assignee of an entity who entered into this plan with the issuer; and
3. the beneficiary, if the beneficiary has rights under this plan to make decisions concerning this plan, unless the beneficiary's only right is to request that disability assistance payments ^{Footnote 4}  be made as detailed in section 7A(b).

Legislated maximum formula result means the result of the formula described in paragraph 146.4(4)(l) of the ITA.

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 day on which the beneficiary dies and the day on which this plan is terminated.

Non-qualified investment means an investment not described in the definition of qualified investment in subsection 146.4(1) of the ITA.

Plan means this arrangement established hereunder and known as the [insert name] disability savings plan.

Plan trust means the trust governed by this plan.

Qualifying family member ^{Footnote 5}  means the beneficiary’s legal parent, brother, sister, spouse or common-law partner. A spouse or common-law partner qualifies if they are not living apart from the beneficiary due to a breakdown in their marriage or common-law partnership.

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 2 or 3 of this definition.

Other than for the purpose of acquiring successor or assignee rights as described in section 4, an individual who is a qualifying family member in relation to the beneficiary is a qualifying person if the following conditions are met: ^{Footnote 3}  

a) The qualifying family member opens this plan for the beneficiary before January 1, 2027;

b) At the time this plan is opened, the beneficiary is not the beneficiary of another RDSP;

c) The beneficiary attained the age of majority before this plan was entered into;

d) No entity that is legally authorized to act on behalf of the beneficiary exists; and

e) After reasonable enquiry, the issuer determines that the beneficiary is not contractually competent to enter into this plan with the issuer.

Registered disability savings plan (RDSP) means a disability savings plan that satisfies the conditions of section 146.4 of the ITA.

Specified maximum amount means the greater of the legislated maximum formula result and the sum of:

• 10% of this plan’s fair market value; and
• all periodic payments from locked-in annuity contracts.

The fair market value does not include amounts held in locked-in annuity contracts. Also, if this plan disposes of a locked-in annuity contract during the calendar year, the periodic payment amount will contain a reasonable estimate of amounts that would have been paid from the annuity into this plan in that year.

Specified minister means the minister as designated in the CDSA.

Specified RDSP payment ^{Footnote 6}  means a payment that is made to this plan after June 2011 that is designated, in prescribed form, by the holder and the beneficiary as a specified RDSP payment at the time the payment is made. The payment is an amount that originated from the registered retirement savings plan, registered retirement income fund, specified pension plan, pooled registered pension plan or registered pension plan of the beneficiary's deceased parent(s) or grandparent(s). The amount was paid as a refund of premiums, an eligible amount, or a payment (with exception to a payment that is part of a series of periodic payments or payments that relate to an actuarial surplus) because of the parent(s) or grandparent(s) death and the beneficiary was financially dependent on the parent or grandparent because of a mental or physical infirmity at the time of their death.

Specified year means the particular calendar year in which a medical doctor or a nurse practitioner, who is licensed to practice under the laws of a province (or the place where the beneficiary resides), certifies in writing that, in his or her professional opinion, the beneficiary is not likely to live more than five years. The specified year includes each of the following five calendar years after the particular calendar year and 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 this plan

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

3 Registration of this plan

The following conditions must be satisfied in order for this plan to be considered registered:

1. before this 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 this plan is entered into, the issuer must be provided with the social insurance numbers of the beneficiary and every entity who enters into this plan with the issuer (in the case of an entity that is a business, their business number);
3. at the time this 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 this plan is opened for him/her. An exception will be made if the beneficiary is not a DTC-eligible individual and the plan is opened as a result of a transfer from the beneficiary’s prior RDSP in accordance with section 8.

This plan will not be considered registered unless the issuer notifies the Specified minister of this plan's existence without delay. The notification must be in prescribed form containing prescribed information.

This plan will not be considered registered if the beneficiary of this plan is also the beneficiary of another registered disability savings plan that has not been terminated without delay. 

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 this plan at the time rights are acquired;
4. a qualifying person in relation to the beneficiary at the time rights under this plan are acquired; or
5. a legal parent of the beneficiary who was previously a holder of this 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 this 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 qualifying family member) ceases to be a qualifying person, he or she will also cease to be a holder of this plan. There must be at least one holder of this plan at all times and the beneficiary or the beneficiary's estate may automatically acquire rights as successor or assignee of a holder in order to comply with this requirement.

A qualifying family member (who is a qualifying person solely because of conditions a) to e) under the qualifying person definition) will cease to be holder of this plan if the beneficiary notifies the issuer that they wish to become the holder and either the issuer, after reasonable enquiry determines the beneficiary to be contractually competent, or a competent tribunal or other provincial authority has declared the beneficiary to be contractually competent. ^{Footnote 3} 

A qualifying family member (who is a qualifying person solely because of conditions a) to e) under the qualifying person definition) will cease to be holder of this plan if an entity described in point 2 or 3 of the qualifying person definition is given legal authority to act on behalf of the beneficiary. The entity will promptly notify the issuer of their appointment, at which time the entity will replace the qualifying family member as holder. ^{Footnote 3} 

If there is a dispute over a qualifying family member’s status as holder, the qualifying family member (who is a qualifying person solely because of conditions a) to e) under the qualifying person definition) must attempt to avoid a reduction in the fair market value of this plan trust’s property. The qualifying family member must apply this requirement until the dispute is settled or a new entity is named as holder. ^{Footnote 3} 

5 Who may become a beneficiary of this plan

An individual may only be designated as a beneficiary of this plan if the individual is resident in Canada when the designation is made. The individual must also be a DTC-eligible individual in respect of the taxation year in which this plan is opened for them before designation to this plan can take place.

An exception will be made to both the residency and DTC requirements if the plan is opened as a result of a transfer from the beneficiary’s prior RDSP in accordance with section 8.

An individual is not considered a beneficiary of this 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 this plan unless they have given written consent to allow another entity to make contributions into this plan.

Contributions may not be made into this plan if the beneficiary is not a DTC-eligible individual in respect of the taxation year in which the contribution is made. Where the beneficiary is not a DTC-eligible individual, a specified RDSP payment can be made into this plan no later than the end of the fourth calendar year following the first year throughout which the beneficiary is not a DTC-eligible individual. ^{Footnote 8} 

Contributions may not be made into this plan if the beneficiary died before that time.

A contribution may not be made into this plan 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 this plan or to any other RDSP of the beneficiary would exceed $200,000.

A contribution does not include government funded benefits, amounts from a designated provincial program or from another program that has a similar purpose and is funded directly or indirectly by a province (other than an amount paid by an entity described in paragraph 3 of the qualifying person definition, or an amount transferred to this plan in accordance with section 8).

Other than for the purposes of this section and for the purposes of section 7A, a specified RDSP payment and an accumulated income payment from a registered education savings plan are not considered contributions to this plan. ^{Footnote 7} 

7 Payments from this plan

^{Footnote 9} No payments will be made from this plan other than:

1. the payment of disability assistance payments to a beneficiary of this 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 or under a designated provincial program.

A disability assistance payment may not be made from this plan if the fair market value of the property held by this plan trust, immediately after the payment is made, would be less than the assistance holdback amount in relation to this 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 this 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 this plan is established.

If the beneficiary has reached 59 years of age before the particular calendar year, the total of all disability assistance payments made from this plan in the year will not be less than the legislated maximum formula result. If the property in this plan trust is insufficient to make available the required amount, a lesser amount may be paid.

Lifetime disability assistance payments for a calendar year are limited to the amount determined by the legislated maximum formula result.

7A Disability assistance payments 

If the total amount of all government funded benefits paid into this and any other registered disability savings plan of the beneficiary before the beginning of the calendar year exceeds the total amount of contributions paid into this and any other registered disability savings plan of the beneficiary before the beginning of the calendar year, then the following conditions must be met:

(a) If the calendar year is not a specified year for this plan, and the conditions in section 9(2)(a) and (b) are not met in the calendar year, the total amount of disability assistance payments made in the year from this plan will not exceed the specified maximum amount. 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 RDSP 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 RDSP 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 this plan in the year provided that the total of all disability assistance payments made from this plan in the year does not exceed the amount imposed by the constraints of paragraph (a) of this section. These payments may not be made from this plan if the fair market value of the property held by this plan trust, immediately after the payment is made, would be less than the assistance holdback amount in relation to this plan.

8 Transfers

At the direction of the holder(s) of this plan, the issuer will transfer all property held by this plan trust directly to another RDSP of the beneficiary. The issuer will provide the issuer of the new RDSP with all information in their possession (that was not previously provided to the Specified minister) that is necessary for the new issuer to comply with the requirements of the Applicable legislation. The issuer will terminate this plan immediately after completing the transfer to the new RDSP.

In addition to any other disability assistance payments ^{Footnote 1} that are required to be paid to the beneficiary in the year, if the beneficiary is transferring an amount from another RDSP and the beneficiary attained the age of 59 years before the calendar year in which the transfer occurs, this 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 RDSP in the year if the transfer had not occurred exceeds;
2. the total amount of disability assistance payments made from the prior RDSP in the year.

9 Termination of this plan

After taking into consideration the assistance holdback amount and designated provincial program repayments, any remaining amount in this plan will be paid to the beneficiary or to his or her estate. This amount will be paid and the plan will terminate 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 in which the following conditions are met:
   • the holder has requested that the issuer terminate this plan, and
   • throughout the year the beneficiary has no severe and prolonged impairment as described in paragraph 118.3(1)(a.1) of the ITA. 

10 Non-compliance of this plan

If either the issuer, the holder, or the beneficiary of this plan fails to comply with the requirements in respect of registered disability savings plans as set out in the Applicable legislation or if this plan is not administered in accordance with its terms, this plan will be considered non-compliant and will cease to be a registered disability savings plan at that time. The Minister of National Revenue may consider deferring or waiving the deregistration of this plan.

At the time this plan ceases to be registered, a disability assistance payment will be deemed to have been made from this plan to the beneficiary or, if the beneficiary is deceased, to his or her estate, that is equal to the amount by which the fair market value of the property held by this plan trust exceeds the assistance holdback amount.

If this plan ceases to be registered because a disability assistance payment is made that results in the fair market value of the property in this plan being less than the assistance holdback amount, an additional disability assistance payment will also be deemed to be made from this 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 this plan and the fair market value of the property held by this plan trust at the time of payment exceeds;
2. the fair market value of the property held by this plan trust immediately after the payment

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

11 Obligations of the issuer 

The issuer will forward notification of any change in holder under this plan to the Specified minister 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 this plan's terms and conditions.

If the issuer discovers that this 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 this plan trust holds a non-qualified investment.

If a qualifying family member (who is a qualifying person solely because of conditions a) to e) under the qualifying person definition) opens this plan and becomes holder, the issuer will promptly notify the beneficiary of this fact in writing. The notification will include the information in section 4 that describes how the qualifying family member can be replaced by another entity as this plan's holder. The issuer will collect and use all information provided by the holder that is required to administer and operate this plan. ^{Footnote 3}

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.

The issuer will not be held liable for entering into this plan with a qualifying family member if at the time this plan was entered into, the issuer had made a reasonable enquiry into the beneficiary’s contractual competence and it was the issuer’s opinion that the beneficiary’s contractual competence was in doubt. ^{Footnote 3}

12 Responsibility for this plan and this plan trust 

The issuer has ultimate responsibility for the administration of this plan and this plan trust. Therefore, the issuer shall ensure that this plan and this 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 this plan, the ultimate responsibility for this plan and this 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.

For more information on the RDSP program, see IC99-1R3.