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Financial Planning  ->  Disabilities -> Registered Disability Savings Plans

Registered Disability Savings Plans (RDSPs)

Income Tax Act s. 146.4, Canada Disability Savings Act and Regulations

A registered disability savings plan (RDSP) can be set up for a beneficiary who is:

bullet eligible for the disability tax credit (DTC)
bulletunder the age of 60 (must apply before end of calendar year in which you turn 59)
bulleta Canadian resident with a Social Insurance Number (SIN), and
bulletlooking for a long-term savings plan

Registered disability savings plans (RDSPs) were introduced in the 2007 Federal Budget, and were available late in 2008.  Their purpose is to ensure financial security for a severely disabled child, when parents or grandparents are no longer able to provide support.  An RDSP can also be set up by someone eligible for the disability tax credit themselves, to help ensure their future financial security.

The deadline for making contributions to an RDSP, and applying for the RDSP Grant and Bond, is December 31 of each year.  See Important Dates for RRSP, RDSP, HBP and LLP on the Canada Revenue (CRA) website.

The information presented here is based on the following sources:

Income Tax Act

Canada Disability Savings Act and Regulations

Department of Finance legislative proposals, explanatory notes and overview relating to registered disability savings plans

Department of Finance Budget 2007 information on RDSPs

On October 21, 2011, the Federal government announced the launch of the Government of Canada's review of the Registered Disability Savings Plan.  Individuals and groups were invited to share their views with the government.

The Expert Panel which recommended RDSPs also recommend that, for the RDSP program to be effective, RDSP assets and income should not disqualify a plan beneficiary from receiving provincial or territorial income support provided to persons with disabilities.  BC has already made legislation changes to this effect.  Alberta, Manitoba and Ontario have expressed plans to do the same.  If this affects you, check with your provincial government to determine how they are treating the RDSP assets and income in relation to income support programs.

See the following articles regarding RDSPs:

Who can set up an RDSP?

Payments into the RDSP

Payments out of the RDSP

Taxable amount of disability assistance payments

Termination of the RDSP

Rollovers to an RDSP from the RRSP/RRIF or RPP of a deceased person

Rollovers to an RDSP of accumulated income payments from a Registered Education Savings Plan (RESP)

What investments can be held in an RDSP?

See also - links to all information on TaxTips.ca related to persons with disabilities.

Employment and Social Development Canada Resources

Registered Disability Savings Plans - Including an RDSP Savings Calculator

Canada Revenue Agency (CRA) Resources intended primarily for use by RDSP issuers:

Frequently asked questions on RDSPs

IC99-1R1 Registered Disability Savings Plans

RDSP Bulletins

Income Tax Folio S3-F10-C3, Advantages - RRSPs, RESPs, RRIFs, RDSPs and TFSAs

Revised: April 17, 2021

 

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