Registered disability savings plan rules
A registered disability savings plan (RDSP) is a savings plan intended to help an individual who is approved to receive the disability tax credit (DTC) to save for their long-term financial security.
Contributions to an RDSP are not tax deductible and can be made until the end of the year in which the beneficiary turns 59. Contributions that are withdrawn are not included as income to the beneficiary when paid out of an RDSP. However, the Canada disability savings grant (grant), the Canada disability savings bond (bond), investment income earned in the plan, and the proceeds from rollovers are included in the beneficiary's income for tax purposes when paid out of the RDSP.
For more information on RDSPs, go to Savings and pension plan administration.
Anti-avoidance rules
RDSPs will be subject to anti-avoidance rules similar to the rules already in place for registered retirement income funds (RRIFs), registered retirement savings plans (RRSPs), and tax-free savings accounts (TFSAs). The change will be effective for RDSP transactions after March 22, 2017. The previous RDSP anti-avoidance rules will continue to apply for RDSP transactions undertaken prior to March 23, 2017.
The anti-avoidance rules for RDSP provide for a special tax on certain advantages that unduly exploit the tax attributes of an RDSP, as well as special taxes on prohibited investments and on non qualified investments.
Topics
- Eligibility and contributions
Who can become a beneficiary of an RDSP, who can contribute to an RDSP - RDSP limits, transfers, and rollovers
Contribution limits, conditions for transferring from one RDSP to another, rollovers, rollover reporting, and eligible individuals - Opening an RDSP
How to open an RDSP, who can open an RDSP, who can be a holder of the plan - Cessation of disability or death of a beneficiary
What happens if the beneficiary is no longer eligible for the disability tax credit, what happens if the beneficiary dies - Payments and rules
Types of payments, when payments are made, how payments are reported, rules when government grants and bonds exceed contributions - Canada disability savings grant and Canada disability savings bond
Description of grants and bonds, government contribution rates, when repayments of grants and bonds are needed - Tax payable
Types of investments that are subject to tax, who is liable