InfoCapsule 16: Repayment rule

Disclaimer: RDSP issuers

The information contained on this page is technical in nature and is intended for Registered Disability Savings Plan (RDSP), Canada Disability Savings Grant (CDSG) and Canada Disability Savings Bond (CDSB) issuers. For general information, visit the RDSP section.

Consult this page frequently for newer versions. The following laws and regulations take precedence over information contained in InfoCapsules in the event of discrepancies:

  • Income Tax Act
  • Canada Disability Savings Act
  • Canada Disability Savings Regulations

Alternate format

Rule

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:

  • the loss of Disability Tax Credit (DTC) eligibility of the beneficiary
  • the death of the beneficiary
  • the closure of the RDSP
  • the non-compliance of the RDSP
  • a withdrawal: disability assistance payment (DAP) and/or lifetime disability assistance payment (LDAP)

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  • the proportional amount (3 to 1) which requires that $3 in CDSG and CDSB be repaid, for every $1 withdrawn from an RDSP up to a maximum of the total AHA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

  1. Identify the repayment period, which includes the AHA period up until the current date
  2. 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 two. 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
  3. 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 $0
  • 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.

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