InfoCapsule 16: Repayment obligation
Disclaimer: RDSP issuers
The information contained on this page is technical in nature. The target audience are issuers of the:
- Registered Disability Savings Plan (RDSP)
- Canada Disability Savings Grant (CDSG)
- Canada Disability Savings Bond (CDSB)
For general information, visit the RDSP page.
On this page
Alternate format
A PDF version of the InfoCapsules for RDSP providers is available on the index page.
List of acronyms
- AHA
- Assistance holdback amount
- CDSB
- Canada Disability Savings Bond
- CDSG
- Canada Disability Savings Grant
- DAP
- Disability assistance payment
- DTC
- Disability Tax Credit
- ESDC
- Employment and Social Development Canada
- LDAP
- Lifetime disability assistance payment
- RDSP
- Registered Disability Savings Plan
- SDSP
- Specified Disability Savings Plan
Preface
Certain events will require the issuer to repay, to the Government of Canada, all or a portion of the Canada Disability Savings Grant (CDSG) and the Canada Disability Savings Bond (CDSB) previously paid into a Registered Disability Savings Plan (RDSP).
An event can be:
- a withdrawal:
- which includes a disability assistance payment (DAP) and a lifetime disability assistance payment (LDAP)
- the death of the beneficiary
- the closure of the RDSP
- the non-compliance of the RDSP
- the beneficiary is not eligible for the Disability Tax Credit (DTC) and the RDSP holder requests closure of the plan
Repayment amount
Depending on the trigger event, the repayment amount will either be:
- the assistance holdback amount (AHA) which is the total amount of CDSG and CDSB paid into an RDSP within a 10-year period before an event, less any amount of CDSG and CDSB paid into the RDSP during the same 10-year period that has previously been repaid to the Government of Canada, or
- the proportional amount (3-to-1) which requires that $3 in CDSG and CDSB be repaid, for every $1-withdrawn from an RDSP up to a maximum of the total AHA
Note: A withdrawal is the only event that can result in the repayment of the proportional (3 to 1) amount.
What to do when an event occurs
- Identify the repayment period, which includes the AHA period up until the current date
- Identify the amount of the AHA. In the case of a withdrawal, the issuer must also calculate the proportional amount and repay the lesser of the 2. In order to determine the CDSG and the CDSG included in the repayment period, the issuer must use the date it was paid into the RDSP. This date is provided by Employment and Social Development Canada (ESDC) in the monthly Transaction Processing File
- Repay the CDSG and the CDSB in the same order in which they were initially paid into the plan, from the oldest to the newest
Note: Any amount of CDSG and CDSB repaid to the Government of Canada cannot be reinstated.
Repayment example
| Year | CDSG and CDSB |
|---|---|
| 2010 | $1,000 |
| 2011 | $2,500 |
| 2012 | $3,000 |
| 2013 | $0 |
| 2014 | $0 |
| 2015 | $1,000 |
| 2016 | $1,000 |
| 2017 | $1,000 |
| 2018 | $1,000 |
| 2019 | $0 |
| 2020 | $1,000 |
Table 1: Repayment example
- An RDSP is opened on February 3, 2010
- A $2,500 DAP is requested on December 31, 2020
- The AHA period is from January 1, 2011, to December 31, 2020
- The AHA is equal to $10,500
- The proportional repayment is $2,500 times 3 which equals $7,500
Since the proportional amount is less than the AHA, the proportional repayment will apply and $7,500 will have to be repaid to the Government of Canada.
Exception: In the event of a withdrawal, there is no repayment of the AHA if an RDSP is designated as a Specified Disability Savings Plan (SDSP).
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