Registered Disability Savings Plan (RDSP): Grants, Bonds, and Tax Treatment in Canada

The Registered Disability Savings Plan (RDSP) is one of the most underutilised registered accounts in Canada. It combines government grants of up to 300% matching on contributions with tax-deferred growth and flexible withdrawal rules — designed to help Canadians with disabilities build long-term savings.

Despite being available since 2008, RDSP take-up remains low. Many eligible individuals — or the family members who would contribute on their behalf — do not know the account exists, or assume it is too complicated to open. This article covers the basics, the numbers, and how to access the matching grants.

Who Is Eligible

An RDSP can be opened for a beneficiary who:

Is a Canadian resident
Has a valid Social Insurance Number (SIN)
Is eligible for the Disability Tax Credit (DTC) — the DTC certificate must be approved by the CRA for at least one year in which contributions are made
Is under age 60 (contributions can be made until December 31 of the year the beneficiary turns 59)

The DTC is the gateway. If you or your family member has a disability but has not applied for the DTC, that is the first step. The application requires a medical practitioner to complete Form T2201 certifying the nature and severity of the impairment. The CRA reviews the form and issues a Notice of Determination — approval opens access to the RDSP, the DTC itself, and other provincial disability benefits.

The Two Government Programs: Grants and Bonds

Canada Disability Savings Grant (CDSG)

The CDSG is a matching grant paid into the RDSP based on contributions made:

Beneficiary Family Income (2025)	On First $500 Contributed	On Next $1,000 Contributed	Maximum Annual Grant
$0 – $111,733	300% ($1,500 on $500)	200% ($2,000 on $1,000)	$3,500 on $1,500 contributed
$111,734+	100% ($500 on $500)	100% ($1,000 on $1,000)	$1,500 on $1,500 contributed

Family income is based on the beneficiary’s family income (for beneficiaries under 18) or the beneficiary’s own income (for beneficiaries 18 and over).

The matching rates are extraordinarily generous by the standards of government savings programs. A 300% match on the first $500 means a $500 contribution earns $1,500 in government money — a 300% immediate return — before any investment growth.

The lifetime CDSG limit is $70,000 per beneficiary.

Canada Disability Savings Bond (CDSB)

The CDSB is a non-matching grant — the government contributes money even if the beneficiary makes no contributions. Eligibility is based on family income:

Beneficiary Family Income (2025)	Annual CDSB
$0 – $37,487	$1,000 per year
$37,488 – $55,867	$1,000 less a partial phase-out (prorated)
$55,867+	$0

The lifetime CDSB limit is $20,000 per beneficiary.

Important: The CDSB is not automatic — an RDSP must be opened and maintained. If you were eligible for the CDSB for 10 years but only opened an RDSP now, you can request the government carry forward and deposit the missed CDSB amounts for up to 10 years into the plan. This is a key planning point: even if the beneficiary is now in their 20s and was eligible since childhood, years of unclaimed bonds can be recovered.

Carry-Forward of Unused Grant and Bond Room

One of the most valuable — and least-known — features of the RDSP: unused grant and bond room can be carried forward for 10 years.

If a beneficiary was DTC-eligible since 2016 but only opened an RDSP in 2026, contributions in 2026 can match against grant room accrued since 2016 (up to the annual maximums, applied to the earliest year first). A $3,500 contribution in 2026 could attract grants across multiple prior years — potentially $3,500 × the matching rate × number of years with available grant room.

The carry-forward entitlement is calculated by the CRA and reported to the RDSP issuer (the financial institution holding the plan). Beneficiaries should request a grant entitlement statement from their RDSP issuer to understand how much carry-forward room exists before making contributions.

Contribution Rules

Anyone can contribute — the beneficiary, parents, grandparents, friends, a trust, a corporation. There is no requirement that the contributor be related to the beneficiary.
No annual contribution limit — unlike the TFSA or RRSP, there is no annual dollar cap on contributions. The limit is only the lifetime cap.
Lifetime contribution limit: $200,000 per beneficiary.
Contributions are not tax-deductible — unlike RRSP contributions, RDSP contributions do not reduce the contributor’s taxable income.
Contributions stop at the end of the year the beneficiary turns 59.

How Money Inside the RDSP Is Taxed

Growth inside the RDSP is tax-deferred — investment income, capital gains, dividends, and interest accumulate without annual tax reporting. No T3 or T5 slips are issued for RDSP holdings.

Withdrawals: The LDAP and DAP Rules

Withdrawals from an RDSP are called Disability Assistance Payments (DAPs). Each withdrawal is split into three components for tax purposes:

Grants and bonds (CDSG + CDSB): Taxable to the beneficiary in the year of withdrawal. This is the government’s clawback — the grants and bonds that went in tax-free are taxed on the way out.
Investment growth (interest, dividends, capital gains): Taxable to the beneficiary in the year of withdrawal, at their marginal rate.
Contributions (the original deposit money): Returned tax-free — this is not deducted on the way in, so it is not taxed on the way out.

The proportion of each withdrawal that is taxable depends on the plan’s composition at the time. The RDSP issuer calculates the taxable portion and issues a T4A slip.

Mandatory LDAP Withdrawals

Once the beneficiary turns 60, or earlier if requested, a Lifetime Disability Assistance Payment (LDAP) regime applies — a mandatory minimum withdrawal similar to a RRIF. The LDAP formula is based on the plan’s fair market value divided by a life-expectancy factor. This ensures the plan is drawn down over the beneficiary’s retirement rather than left untouched.

RDSP vs Other Registered Accounts

Feature	RDSP	RRSP	TFSA	RESP
Contribution deduction	No	Yes	No	No
Government matching	Yes (up to 300%)	No	No	Yes (20% CESG)
Grants for non-contributors	Yes (CDSB)	No	No	No (CLB similar but different)
Tax on withdrawal	Partial (grants + growth taxed)	Full (all taxed)	None	Partial (growth + grants taxed)
Age limit to contribute	59	71	18+ only (contribution room accrues from 18)	31 years after plan opened (max age 35 for CESG)
Lifetime contribution limit	$200,000	No overall limit (annual cap)	Cumulative room (no overall cap)	$50,000

The RDSP is the most generous of the four in terms of government matching, but it is restricted to DTC-eligible individuals — a much smaller population than those eligible for TFSAs or RRSPs.

Opening an RDSP

RDSPs are offered by most major Canadian financial institutions — but not all. The “Big 5” banks (RBC, TD, Scotiabank, BMO, CIBC) all offer RDSPs, as do some credit unions and robo-advisors. Availability varies by province.

To open an RDSP:

Obtain DTC approval from the CRA (Form T2201)
Choose a financial institution that offers RDSPs and has the investment options you want (typically mutual funds, GICs, or self-directed brokerage)
The institution sets up the plan and registers it with the CRA
The institution processes grant applications automatically — contributions trigger the CDSG/CDSB application to Employment and Social Development Canada (ESDC)

If the Beneficiary Loses DTC Eligibility

If the CRA determines the beneficiary is no longer DTC-eligible (e.g., after a periodic reassessment), contributions must stop, but the plan can remain open. Withdrawals can continue. If DTC eligibility is later regained, contributions can resume. There is no forced closure or deregistration upon loss of DTC status.

If the Beneficiary Dies

On the death of the beneficiary, the RDSP is collapsed. The proceeds, minus the repayment of all CDSG and CDSB received in the 10 years before death (the “10-year rule”), are paid to the beneficiary’s estate. The Assistance Holdback Amount (AHA) — the total of grants and bonds paid in the preceding 10 years — is returned to the government. The remainder (contributions + grants/bonds outside the 10-year window + investment growth) flows to the estate and is taxed as a DAP.

This 10-year repayment rule is why RDSPs are best seen as a long-term holding — early death (within 10 years of receiving grants) results in a clawback.