Income Tax Information

RDSP Information

A registered disability savings plan (RDSP) is a savings plan that is intended to help parents and others save for the long-term financial security of a person who is eligible for the Disability Tax Credit.

The government of Canada contributes to an RDSP through the Canada disability savings grants (CDSG) and the Canada disability savings bonds (CDSB).

Contributions to an RDSP are not tax deductible and can be made until the end of the year in which the beneficiary turns 59 years of age. Contributions that are withdrawn are not to be included as income for the beneficiary when paid out of a RDSP. However, the Canada disability savings grant (CDSG), Canada disability savings bond (CDSB) and investment income earned in the plan will be included in the beneficiary’s income for tax purposes when paid out of the RDSP.

For more information on RDSPs go to http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rdsp-reei/menu-eng.html

What are Canada disability savings grants (CDSGs)?

A CDSG is an amount that the government of Canada contributes to an RDSP. The government will pay matching grants of 300, 200, or 100 percent, depending on the beneficiary’s family income and the amount contributed. An RDSP can receive a maximum of $3,500 in matching grants in one year, and up to $70,000 over the beneficiary’s lifetime. A grant can be paid into an RDSP on contributions made to the beneficiary’s RDSP until December 31 of the year the beneficiary turns 49 years old.

The amount of the CDSG is based on the beneficiary’s family income as follows:

Beneficiary's family income	Contribution	Grant	Maximum
$77,664* or less	On the first $500	$3 for every $1 contributed	$1,500
	On the next $1,000	$2 for every $1 contributed	$2,000
More than $77,664*	On the first $1,000	$1 for every $1 contributed	$1,000

*The beneficiary family income thresholds are indexed each year to inflation. The income thresholds shown are for 2009.

What are Canada disability savings bonds (CDSBs)?

A CDSB is an amount paid by the government of Canada directly into an RDSP. The government will pay income-tested bonds of up to $1,000 a year to low-income Canadians with disabilities, regardless of the amount contributed. The lifetime bond limit is $20,000. A bond can be paid into an RDSP until the year in which the beneficiary turns 49 years old.

The amount the CDSB is based on the beneficiary’s family income as follows:

Beneficiary's family income	Bond
$21,816* or less (or if the holder is a public institution)	$1,000
Between $21,816* and $38,832*	Part of the $1,000 based on the formula in the Canada Disability Savings Act
More than $38,832*	No bond is paid

*The beneficiary family income thresholds are indexed each year to inflation. The income thresholds shown are for 2009.

When are repayments of Canada disability savings grants and Canada disability savings bonds required?

If any of the following trigger events occur, all government grants and bonds paid into the plan during the preceding ten years before the event must be repaid to the Government of Canada. These trigger events are:

• the RDSP is terminated (voluntary closure);
• the plan is deregistered;
• a payment is made from the plan;
• the beneficiary ceases to be eligible for the disability amount; or
• the beneficiary dies.

For more information about the grant and bond, visit the Human Resources and Skills Development Canada website.