Disability Savings
Registered Disability Savings Plan
The RDSP is a long-term savings vehicle designed to help Canadians with disabilities and their families build financial security. The federal government provides generous matching grants and bonds that can significantly multiply your contributions. For eligible families, the RDSP is one of the most powerful savings tools available in Canada, yet it remains underutilized. Understanding how it works is the first step toward securing your loved one's financial future.
Free RDSP & DTC Setup Guide
A 10-page branded PDF that walks you through the entire process, from applying for the Disability Tax Credit to opening the RDSP and claiming government grants. Includes:
- Step-by-step DTC application instructions (Form T2201)
- RDSP opening process with participating institutions
- 2025 CDSG and CDSB income tables and matching rates
- Government form links and phone numbers
- Printable preparation checklist
In This Guide
Lifetime Contribution Limit
$200,000
No annual limit
Max CDSG (Grant)
$70,000
Lifetime per beneficiary
Max CDSB (Bond)
$20,000
No contributions needed
Grant Eligibility
To Age 49
Contributions to age 59
Disability Tax Credit Eligibility
The DTC is the gateway to opening an RDSP.
To open an RDSP, the beneficiary must be approved for the Disability Tax Credit (DTC) by the Canada Revenue Agency. The DTC is available to individuals who have a severe and prolonged impairment in physical or mental functions that markedly restricts their ability to perform basic activities of daily living. A qualified medical practitioner must certify the impairment on Form T2201.
Who Can Qualify
- Physical disabilities (mobility, limb differences, vision, hearing)
- Cognitive and developmental disabilities
- Mental health conditions (when markedly restricting daily living)
- Cumulative effect of multiple restrictions
Key Requirements
- Must be a Canadian resident with a valid SIN
- Impairment must be expected to last 12+ months
- Form T2201 must be certified by a medical practitioner
- DTC must be approved before RDSP can be opened
How RDSPs Work
The basic mechanics of opening, contributing to, and benefiting from an RDSP.
Qualify for the DTC
Have a medical practitioner complete Form T2201 and submit it to CRA. Once approved, the beneficiary is eligible to open an RDSP. The DTC can be applied for at any age.
Open an RDSP
A plan holder (parent, legal representative, or the individual themselves if 18+) opens the account at a participating financial institution. The beneficiary must be under 60 and a Canadian resident.
Contribute and Receive Grants
Make contributions up to the $200,000 lifetime limit. The government matches with CDSG grants (up to $3,500/yr) and may provide CDSB bonds (up to $1,000/yr) for lower-income beneficiaries. No contributions are needed for the bond.
Build Long-Term Security
Investments grow tax-deferred inside the plan. Withdrawals (DAP or LDAP) begin when needed, with the grant/bond portion taxable in the beneficiary's hands. The 10-year holdback rule protects government contributions.
Canada Disability Savings Grant
The CDSG matches your contributions at rates of 100%, 200%, or 300% depending on family income.
CDSG Matching Rates by Family Income (2025)
300% on first $500 + 200% on next $1,000
100% on first $1,000
Annual Grant Potential (with $1,500 contribution)
For families with adjusted net income of $106,717 or less (2025), the government matches the first $500 of contributions at 300% ($1,500 in grants) and the next $1,000 at 200% ($2,000 in grants), for a maximum of $3,500 per year. To receive the full $3,500, you only need to contribute $1,500. For families with income above $106,717, the match rate is 100% on the first $1,000, for a maximum of $1,000 per year.
The income used for determining the match rate is the beneficiary's family income if they are under 19, or the beneficiary's own income (plus spouse, if applicable) if they are 19 or older. This means that once the beneficiary is an adult with low personal income, they may qualify for the higher matching rate regardless of their parents' income.
Canada Disability Savings Bond
Free government money for lower-income beneficiaries. No contributions required.
The CDSB is a government contribution deposited directly into the RDSP for beneficiaries from lower-income families. Unlike the CDSG, the bond requires no personal contributions at all. Simply having an open RDSP is enough to receive it.
| Family Net Income (2025) | Annual Bond | Lifetime Maximum |
|---|---|---|
| $36,502 or less | $1,000 | $20,000 |
| $36,502 to $55,867 | Partial (prorated) | $20,000 |
| Over $55,867 | $0 | N/A |
Why This Matters
Even if a family cannot afford to make any contributions, opening an RDSP and maintaining it can result in up to $20,000 in government bonds over 20 years, plus investment growth on those bonds. Combined with the CDSG, a low-income beneficiary who contributes just $1,500 per year could receive up to $4,500 per year in combined government grants and bonds.
Withdrawal Rules
Understanding LDAP vs DAP withdrawals and the holdback rule.
LDAP
Lifetime Disability Assistance Payment
- Recurring annual payments (like a pension)
- Must begin by December 31 of the year the beneficiary turns 60
- Annual maximum is formula-based (fair market value divided by remaining life expectancy factor)
- Does not trigger the holdback rule (if within the annual limit)
DAP
Disability Assistance Payment
- Lump-sum withdrawal, available any time
- Subject to the 10-year holdback rule (see below)
- Grant/bond portion is taxable in the beneficiary's hands
- Personal contributions are returned tax-free
The 10-Year Holdback Rule
The most important rule to understand before making withdrawals.
The Assistance Holdback Amount (AHA) is the mechanism that protects government grants and bonds from being withdrawn too quickly. If you make a DAP (lump-sum withdrawal) or if certain triggering events occur, you may be required to repay $3 of grants and bonds for every $1 withdrawn, based on grants and bonds received in the previous 10 years.
Practical Impact
If you received $3,500 in CDSG each year for the past 10 years ($35,000 total), and you make a large DAP, you could be required to repay up to $35,000 in grants. The repayment is capped at the actual grants and bonds received in the 10-year window. This means early withdrawals can be very costly.
The holdback rule effectively encourages long-term savings. Once 10 years have passed since the last grant or bond was received, the AHA drops to zero and withdrawals no longer trigger repayments. Government grants stop at age 49, so by age 59, the holdback period has fully expired.
Exceptions to the holdback rule exist for beneficiaries with a shortened life expectancy (5 years or less, certified by a medical practitioner) and in certain cases where the DTC is lost. Consult a financial professional before making any RDSP withdrawals.
RRSP/RRIF Rollover on Death
A powerful estate planning tool for families with a DTC-eligible dependent.
When a parent or grandparent passes away, their RRSP, RRIF, or RPP proceeds can be rolled over tax-free into a financially dependent child or grandchild's RDSP, up to the $200,000 lifetime contribution limit. This rollover does not count against the beneficiary's RDSP contribution room in the traditional sense, but it does count toward the $200,000 lifetime limit. The rollover does not trigger CDSG matching.
Requirements
- The beneficiary must have been financially dependent on the deceased
- The rollover must be completed within the allowed time frame
- The RDSP must have sufficient contribution room (under $200,000 lifetime)
- The rollover amount is not eligible for CDSG matching
This provision makes the RDSP an important consideration in estate planning for any family with a DTC-eligible member. Naming the RDSP as a beneficiary of retirement assets can provide significant long-term financial security while avoiding immediate tax on the deceased's final return.
Key Numbers at a Glance
Quick reference for RDSP limits, grants, bonds, and rules.
| Item | Amount / Rule |
|---|---|
| Lifetime contribution limit | $200,000 |
| Annual contribution limit | None |
| CDSG max (lower income, per year) | $3,500 (on $1,500 contribution) |
| CDSG max (higher income, per year) | $1,000 (on $1,000 contribution) |
| Lifetime CDSG maximum | $70,000 |
| CDSG catch-up max (single year) | $10,500 |
| CDSB max (per year) | $1,000 (income ≤ $36,502) |
| Lifetime CDSB maximum | $20,000 |
| Grant eligibility ends | End of year beneficiary turns 49 |
| Contribution eligibility ends | End of year beneficiary turns 59 |
| LDAP must begin by | Dec 31 of year beneficiary turns 60 |
| Holdback rule | $3 repaid per $1 withdrawn (10-year window) |
| RRSP/RRIF rollover on death | Up to $200,000 (tax-free) |
Important Notes
Conditions, limitations, and what to discuss with your financial professional.
In most provinces, RDSP assets and certain RDSP withdrawals are exempt from provincial disability benefit calculations. This means having an RDSP generally will not reduce AISH (Alberta), ODSP (Ontario), or equivalent provincial benefits. However, the rules vary by province and the exemption amounts may have limits. In Alberta, RDSP assets are fully exempt from AISH asset calculations, and RDSP income is exempt up to certain thresholds. Always verify the current rules with your provincial disability benefits office.
This guide is for educational purposes only and does not constitute financial, tax, or legal advice. RDSP rules, contribution limits, grant and bond amounts, and income thresholds are subject to change by the federal government. DTC eligibility is determined by the CRA based on medical certification. Your actual results will depend on your specific financial situation, contribution history, and investment returns. Consult a licensed financial professional before making RDSP decisions.
RDSP Projection Calculator
See how contributions, CDSG, CDSB, and growth could accumulate over time.
Projected Value
$910,108
Contributions
$73,500
CDSG Grants
$70,000
of $70,000 max
CDSB Bonds
$20,000
of $20,000 max
Growth
$746,608
Projections are illustrative only. Actual returns depend on market conditions and investment choices. Growth rates are not guaranteed. CDSG and CDSB amounts assume no prior grants or bonds have been received and no carry-forward room is used. The 10-year holdback rule is not reflected in these projections.