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Payments into a Registered Disability Savings Plan (RDSP)

Types of Payments Into an RDSP

Contributions to a Registered Disability Savings Plan (RDSP)

Payments into the RDSP by the federal government

Canada Disability Savings Grants (CDSG)

Canada Disability Savings Bonds (CDSBs)

Canada Disability Savings Grant (CDSG) - Matching Rates on Contributions

Maximum Annual CDSGs and CDSBs

CDSG and CDSB carry forwards

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Canada Revenue Agency (CRA) Resources

Types of Payments Into an RDSP

A registered disability savings plan (RDSP) will consist of the following:

	contributions made by the holder
	Canada Disability Savings Grants (CDSGs)
	Canada Disability Savings Bonds (CDSBs) in some cases, and
	investment earnings

Only the contributions can be withdrawn tax-free by the beneficiary. See taxable amount of disability assistance payments for more information.

Contributions to a Registered Disability Savings Plan (RDSP)

	The lifetime maximum for contributions to a registered disability savings plan (RDSP) is $200,000.
	Contributions are permitted to be made until the end of the year in which the beneficiary turns 59.
	There is no annual limit for contributions.
	Contributions to an RDSP are not tax deductible.
	Investments in the RDSP grow tax-free.
	Contributions in kind can be made, by transferring investments into the RDSP. This will result in a deemed disposal of the investments to the person making the transfer, triggering a capital gain or loss. If this results in a capital loss, the loss will not be deductible (Income Tax Act s. 40(2)(g)(iv)(B)). This is the same treatment as when investments are transferred into a registered retirement savings plan (RRSP) or other registered accounts.
	If funds are borrowed to contribute to an RDSP, the interest will not be tax deductible (Income Tax Act s. 18(11)(j)).

Contributions may not be made to the RDSP:

	in any year in which the beneficiary is not eligible for the disability amount tax credit, or
	after the death of the beneficiary

There is no maximum annual RDSP contribution amount, but as noted by Maureen Vance CPA, CA, of Wolters Kluwer CCH, "it may not make sense to contribute the maximum allowable amount to an RDSP if the lifetime limit of the Canada Disability Grant has not yet been reached ($70,000), as you could miss out on some matching grants."

Payments into the RDSP by the federal government

Funds will be paid into the RDSP by the federal government, depending on the amount of contributions and family net income, in the form of

	Canada Disability Savings Grants (CDSGs), and
	in some cases Canada Disability Savings Bonds (CDSBs)

Canada Disability Savings Grants (CDSG)

Canada Disability Savings Act

The federal government will give Canada Disability Savings Grants to the RDSP, depending on family net income and annual contributions. The lifetime limit for CDSG for any beneficiary is $70,000, and the maximum annual amount that can be paid for unused entitlements carried forward is $10,500.

When the beneficiary of the RDSP is

	an individual who is at least 18 years of age, and less than 49 years of age, on December 31 of the preceding year, and whose family net income is less than or equal to $100,392 for 2022 ($106,717 for 2023) (1) in the second preceding year
	a qualified dependent of an eligible individual whose adjusted income for calculation of the child tax benefit in respect of January is less than or equal to $74,357(1), or
	a person for whom a Children's Special Allowance is payable for at least one month in the year,

then the amount of CDSG paid in a year will be a maximum of $3,500, calculated as:

	300% of the first $500 of contributions in the year (up to $1,500 per year), plus
	200% of the next $1,000 of contributions in the year (up to $2,000 per year).

In any other case, the amount of the CDSG will be 100% of the total contributions in the year, to a maximum of $1,000.

(1)The family income amounts are indexed for inflation each year. See the table below.

The family income reported on tax returns from 2 years prior will be used for these calculations. The amount of CDSG and CDSB for which you are eligible in 2023 is based on the family income reported on the 2021 tax return.

Note: The Canada Disability Savings Act Regulations include provisions that an RDSP will be eligible to receive both CDSGs and CDSBs until the end of the year in which the plan beneficiary attains 49 years of age. The Regulations also state that the beneficiary must be a DTC-eligible individual in the year in which the RDSP contribution is made (re CDSGs), or in the year in which the CDSB is payable.

Canada Disability Savings Bonds (CDSBs)

Canada Disability Savings Act

The federal government will also give CDSBs of up to $1,000 per year (for a year during which the beneficiary was resident in Canada), to RDSPs established by low and modest-income families. It is not necessary to make contributions to the RDSP in order to receive CDSBs. The lifetime maximum CDSB limit is $20,000, and the maximum annual amount that can be paid for unused entitlements carried forward is $11,000.

The amount of CDSBs given to an RDSP in a year will be $1,000, if the beneficiary of the RDSP is

	an individual who is at least 18 years of age, and less than 49 years of age on December 31 of the preceding year, and whose family net income is less than or equal to $32,797 for 2022(1),
	a qualified dependent of an eligible individual whose adjusted income for calculation of the child tax benefit in respect of January is less than or equal to $30,000(1), or
	a person for whom a Children's Special Allowance is payable for at least one month in the year

Where the family net income or adjusted income is greater than $32,797 for 2022 ($34,863 for 2023) (1) but less than $50,197 for 2022 ($53,359 for 2023)(1), the amount of the CDSB will be:

$1,000 - [$1,000 x (A - B) / (C - B)]

where

	A is the family net income or adjusted net income
	B is $32,797, and
	C is $50,197

In any other case, there will be no CDSB paid.

Example: For family net income of $40,000, the CDSB for the year will be:

$1,000 - [$1,000 x ($40,000 - $32,797) / ($50,197 - $32,797)]

= $1,000 - [$1,000 x ($7,203 / $17,400)]

= $1,000 - [$1,000 x 0.4139655] = $1,000 - $413.97

= $586.03

(1) The amount of

	B is the phase-out income (Income Tax Act s. 122.61(1)Q(a))
	C is the first threshold (Income Tax Act s. 117(2)(a)

Both of these amounts are indexed annually.

The following tables are reproduced from Department of Finance and Canada Revenue information, and updated for 202 income levels.

Canada Disability Savings Grant (CDSG)
Matching Rates on Contributions

2022 Family Income ⁽¹⁾^($)
up to 100,392	over 100,392
300% on first $500	100% on first $1,000
200% on next $1,000

Maximum Annual CDSGs and CDSBs

	2022 Family Income ⁽¹⁾^($)
	up to 32,797	32,797 to 50,917	50,917 to 100,392	over 100,392
CDSG matching rate	($)
300%	1,500	1,500	1,500	nil
200%	2,000	2,000	2,000	nil
100%	nil	nil	nil	1,000
CDSB	1,000	500⁽²⁾	nil	nil
Total assistance	$4,500	$4,000	$3,500	$1,000

(1) These income thresholds are for 2022, and are indexed to inflation. The first (lowest) threshold is the lower Canada Child Benefit (CCB) threshold. The higher thresholds are the upper thresholds of the first two federal tax brackets. The amounts can be found in the following Employment and Social Development Canada (ESDC) InfoCapsules:

- InfoCapsule 10: Canada Disability Savings Grant (CDSG)

- InfoCapsule 8: Canada Disability Savings Bond (CDSB)

(2) Average amount of CDSB, assuming even distribution of families over income range.

CDSG and CDSB Carry Forwards

The Federal 2010 Budget amended the Canada Disability Savings Act to allow a 10-year carry forward of CDSG and CDSB entitlements. The carry forward was available starting in 2011. Plan holders receive annual statements of CDSG entitlements.

Someone meeting the eligibility requirements (disability tax credit eligibility, Canadian resident, family income) during the carry-forward years before the end of the year in which they turn 49 can carry forward up to 10 years of unused grant and bond entitlements.

The maximum annual amount that can be paid for unused entitlements is $10,500 for the CDSG and $11,000 for the CDSB.

For more information on carry forwards, see the CRA link below.

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