The Registered Disability Savings Plan (RDSP) is a long-term savings plan for Canadians eligible for the Disability Tax Credit (DTC). RDSP contributions are not tax-deductible, but investment growth is tax-deferred and the federal government provides significant matching grants and bonds.
Government contributions
The Canada Disability Savings Grant (CDSG) matches contributions: up to 300% on the first $500 contributed and 200% on the next $1,000, depending on family income. Maximum annual grant: $3,500. The Canada Disability Savings Bond (CDSB) is paid to low-income beneficiaries even with no contribution: up to $1,000 per year. Lifetime limits: $70,000 grant and $20,000 bond.
Withdrawals
Withdrawals after age 60 are taxable in the beneficiary’s hands (typically a low marginal rate). Withdrawals before age 60 trigger a 10-year holdback rule that requires repayment of grants and bonds received in the prior 10 years.
Eligibility
Beneficiary must be approved for the Disability Tax Credit. RDSP can be opened by the beneficiary (age 18+) or by a parent/legal guardian for a minor. Annual contribution limit: $200,000 lifetime, no annual cap.