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26 lacible | Octobre 2017 When the return is considered, however, the value of the plan and the LDAPs fluctuates, while the SSP threshold remains fixed at $950 per month. At a return of 4.0%, the LDAPs fluctuate as follows: FEATURE ARTICLE Since the LDAPs increase annually, the SSP will be reduced by the same amount. Although the LDAPs increase at a rate of 4.2% per year and the SSP increases by 2.1%, the net amount available increases by only 1.1%. One solution to this problem would be to start the LDAPs before the age of 60, to get annual withdrawals that are less than $11,400. Another option would be to have no return in the RDSP, as the LDAP is steady every year. Finally, even though the SSP often stops at age 65, the net amount available (OAS, GIS and LDAP) increases by 39.3% that year and then grows by 3.0% per year. The sensitive period for this plan is therefore between the ages of 60 and 65. Practical Application: Taxation of RDSP Payments and Tax Incentives RDSP contributions are not deductible from taxable income and are not taxable when withdrawn from the plan. 10 The investment income and government incentives (CDSG, CDSB) accrue tax-sheltered in the plan. The non-taxable portion of the LDAP and DAP is simply the relationship between the contributions and the value of the plan, multiplied by the payment. To calculate the taxable portion, just RDSP opening balance $273,600 Inflation 2.10% Age on January 1 LDAP ∆ OAS GIS SSP SSP clawback Net ∆ 59 $11,400 $– $– $11,448 $– $22,848 60 $11,876 4.2% $– $– $11,688 $(476) $23,088 1.1% 61 $12,372 4.2% $– $– $11,934 $(972) $23,334 1.1% 62 $12,891 4.2% $– $– $12,184 $(1,491) $23,585 1.1% 63 $13,432 4.2% $– $– $12,440 $(2,032) $23,840 1.1% 64 $13,998 4.2% $7,703 $11,505 $12,702 $(12,702) $33,205 39.3% 65 $14,589 4.2% $7,864 $11,746 $12,968 $(12,968) $34,199 3.0% 66 $15,207 4.2% $8,029 $11,993 $13,241 $(13,241) $35,229 3.0% 67 $15,853 4.3% $8,198 $12,245 $13,519 $(13,519) $36,296 3.0% 68 $16,530 4.3% $8,370 $12,502 $13,519 $(13,519) $37,402 3.0% 69 $17,238 4.3% $8,546 $12,764 $13,519 $(13,519) $38,548 3.1% 70 $17,980 4.3% $8,725 $13,032 $13,519 $(13,519) $39,738 3.1% Non-taxable portion = LDAP X Total RDSP contributions – non-taxable payments already made FMV of RDSP assets – AHA 10 Except RDSP and RESP rollover. 11 Subsec. 146.4(6) ITA. 12 The example is a single person born in 1978 with an annual income of less than $90,563, who has been making the maximum annual contribution since 2008. To get exactly $273,600 by age 59, that is, the maximum amount to have an LDAP under the SSP threshold, the plan must have a return of 4.12%. subtract the non-taxable amount from the payment. 11 Take, as an example, a single, low-income disabled person, born in 1978. This person will turn 60 in 2038, with an RDSP worth $273,600. The total contributions were $30,000, at a return of 4.12%. 12 With an LDAP of $11,400, the non-taxable portion is $1,250, or 10.96% of the payment. This percentage represents the ratio of the contributions over the FMV of the plan ($30,000/$273,600), and if no other contribution is made, the amount of $1,250 will remain fixed over the years. As for the taxable portion, it is positively correlated with the LDAP: if the LDAP increases, the taxable portion increases by the same amount. The taxable portion must be claimed in the beneficiary's income tax return. This amount must be included when calculating her income taxes.

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