The Registered Disability Savings Plan (RDSP)

The Registered Disability Savings Plan (RDSP) is a long-term savings vehicle introduced by the Canadian federal government in 2008 to help individuals with severe disabilities build financial security. It allows contributions from family and friends, with substantial matching incentives from the government, and earnings grow tax-deferred until withdrawn.

Who Is Eligible?

To open or be named the beneficiary of an RDSP:

  • The individual must be a Canadian resident with a valid Social Insurance Number (SIN).

  • They must qualify for the Disability Tax Credit (DTC) and continue to qualify in future years.

Key Roles
  • Beneficiary: The person with the disability.
  • Plan Holder: The individual who opens and manages the RDSP. This can be the beneficiary (if legally competent) or a parent, guardian, or other qualifying family member.
Key Components of an RDSP

01

Private Contributions

  • Lifetime contribution limit: $200,000

  • Anyone can contribute with written permission from the plan holder.

  • No income tax deduction for contributions.

  • Contributions allowed until the end of the year the beneficiary turns 59.

RRSP/RRIF rollovers and RESP transfers may be permitted under certain conditions.

02

Canadian Disability Savings Grant (CDSG)

  • Lifetime maximum: $70,000
  • Annual matching based on family income from two years prior.

    • If income is under $114,750 (2025):

      • First $500 contributed → $3 grant per $1 = $1,500

      • Next $1,000 → $2 grant per $1 = $2,000

      • Total annual CDSG: $3,500

    • If income is over $114,750:

      • $1,000 contribution → $1,000 grant

  • Grants can be received until the end of the year the beneficiary turns 49.

03

Canadian Disability Savings Bond (CDSB)

  • Lifetime maximum: $20,000

  • No personal contribution required.

  • Up to $1,000 per year for low-income individuals/families.

    • Full bond if income is under $37,487

    • Partial bond for income up to $57,375 (2025)

  • Available until December 31 of the year the beneficiary turns 49.

Grant and bond entitlements can be carried forward for up to 10 years.

Withdrawals from an RDSP

Disability Assistance Payments (DAPs)

  • One-time or occasional payments.

  • Restricted if government contributions outweigh private ones.

  • Withdrawals may trigger repayment of grants/bonds deposited in the last 10 years:

    • $3 repaid for every $1 withdrawn

Lifetime Disability Assistance Payments (LDAPs)

  • Must begin by the end of the year the beneficiary turns 60.

  • Payments are annual and continue for life.

  • Amounts based on a formula related to life expectancy (typically age 83).

Taxation of Payments

Withdrawals include three components:

    1. Private Contributions – not taxed.

    2. CDSGs/CDSBs – taxed in the beneficiary’s hands.

    3. Investment Income – taxed in the beneficiary’s hands.

What Happens If...

The DTC is Lost

If you or your loved one becomes ineligible for the Disability Tax Credit (DTC), you can still keep your Registered Disability Savings Plan (RDSP). However, there are a few important restrictions to be aware of:

  • No new contributions can be made while the beneficiary is not DTC-eligible.

  • Government grants and bonds will stop during this period.

  • Withdrawals are generally not allowed until the beneficiary turns 60, unless special provisions apply.

  • Recent government contributions (within 10 years) must be repaid.
  • Remaining funds are taxable to the estate and distributed per the beneficiary’s will or, if none, according to provincial estate laws.

Benefits of the RDSP

  • Access to up to $90,000 in government grants and bonds

  • Tax-deferred investment growth

  • Flexible withdrawals later in life

  • No impact on ODSP eligibility or other income-tested government programs

The RDSP offers an exceptional opportunity to build long-term financial security for individuals living with disabilities, especially for those in Ontario receiving ODSP.