Finance Committee on Oct. 31st, 2012

[Ted Cook]

Okay, that's fine.

[The Chair, Conservative, James Rajotte]

We'll take questions on part 1(a) for the officials.

Go ahead, Ms. Nash.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you.

The bill would add a line of definition around “substantially gainful” in a manner to be determined by the Governor in Council.

As I understand it, the CPP administrators now rely on existing jurisprudence with respect to a definition regarding a disability pension. If there is going to be a change in definition based on the term “substantially gainful”, what is the intent of that change? Will we be able to get that definition before we complete our examination of this bill, and will there be any impact on the number of people who would be eligible for a disability pension based on a changed definition?

[Ted Cook]

I'm sorry, Ms. Nash, but could you refer me to the specific clause that you're looking at? I'm not sure that it forms part of the RDSP changes.

[Peggy Nash, NDP, Parkdale—High Park, ON]

We have this summary; I don't have the actual bill in front of me. Maybe that's something that I could follow up on with you in writing. Maybe I can quote you the specific location of that within the bill in order to get the answer so that we don't hold up the work of the committee.

[Ted Cook]

That would be fine. I'm sorry. I'm just not sure.

[The Chair, Conservative, James Rajotte]

Go ahead, Mr. Brison, please.

[Scott Brison, Liberal, Kings—Hants, NS]

I have a question about the disability tax credit. Do you have what the cost would be to the treasury of making that fully refundable?

[Ted Cook]

In terms of costing out this particular measure, there was no consideration of making the disability tax credit fully refundable.

[Scott Brison, Liberal, Kings—Hants, NS]

Oh.

[Ted Cook]

This measure doesn't change the criteria for the disability tax credit either. All it does is take the existing system, where if you cease to be eligible for the disability tax credit, you're no longer eligible to keep an RDSP open.... All this measure does is take that existing requirement and say that it recognizes that there may be people who, because of the episodic nature of their illness, may not be eligible for a disability tax credit in any one particular year, but it is certainly foreseeable by a medical practitioner that the individual will again be eligible for it in a future year. It just provides that the RDSP will be able to stay open. It doesn't touch on the disability tax credit as such.

[Scott Brison, Liberal, Kings—Hants, NS]

Okay.

On the 60 years of age aspect, has the age for RRIFs been changed to 71 now? What is it?

[Ted Cook]

I believe it's 71.

[Scott Brison, Liberal, Kings—Hants, NS]

It's 71, so just for the committee to understand the difference and the rationale....

[Ted Cook]

Sure. In terms of the difference between the RRIF and the RDSP, I think you have to look at the basic structure of registered disability savings plans. It goes a little bit into the 3:1 proportionate repayment rule.

When the RDSP was originally designed, it conceptualized that there would be three phases. There would be the phase up until the person is 49, when contributions are made to the RDSP. Then there would be a kind of savings phase from 49 to 59. Then, from 59 or 60, to provide for the long-term care of the beneficiary of the RDSP, it would go forward from 60.

That recognition of ages 49 and 59 and the three phases have always been part of the basic design of the RDSP. In fact, that's why there was what they called the “assistance holdback amount”, so that if you made a withdrawal from an RDSP, you had to repay all the Canada disability savings grants and Canada disability savings bonds that had been paid into it in the last 10 years.

The expectation is that you accumulated up to 49 and you earned investment income until 59, and then, when you started drawing down on that to support your needs, there would have been no grants or bonds paid in during the prior 10 years.

[Scott Brison, Liberal, Kings—Hants, NS]

I can understand the rationale for greater flexibility to make withdrawals from certain RDSPs, but did you consider the risk to the sustainability of individual RDSP accounts if more people do this? If there's a greater quantum of withdrawal, is there a risk that we may jeopardize the potential strength or sustainability of individual accounts?

[Ted Cook]

Well, I think the notion was that.... The proportional repayment is 3:1, so it was felt that this was a big enough disincentive to prevent a premature reduction of the RDSP assets, but at the same time that the existing rule whereby, if you made a small withdrawal, you would have to repay everything that had been contributed over the last 10 years in terms of grants and bonds, was too harsh.

Certainly I think there was a recognition, but the view was that this change to the rule gives people more flexibility and perhaps prevents, in some cases, overly harsh results.

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Caron, s'il vous plaît.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

My question can apply to parts A, B and C, in order to save time.

Whom have you had the chance to consult in order to come up with amendments about the different insurance schemes?

[Ted Cook]

I'll speak first to part 1(a), on the registered disability savings plan.

There was a separate consultation process undertaken by the government. There were quite a number of submissions. There were a number of suggestions. Certainly flexibility around making withdrawals was a particular issue raised by the people who made submissions. I think that was one of the major issues raised.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

You are saying that the department did not do the consulting, it was the government.

[Ted Cook]

Oh, sorry. By “government”, I mean that the Department of Finance—

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Okay.

[Ted Cook]

—did a consultation for the government on RDSPs specifically.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Are the submissions public? Can we have access to them?