Chapter 1. RDSP Grant and Bond

1.1.1 The Grant at a glance

The CDSG is a matching grant paid into an RDSP by the Government of Canada.

The Government of Canada may pay matching grants of 300%, 200%, or 100% depending on the:

• beneficiary's family income
• amount contributed to the RDSP

Note: Income thresholds are indexed annually by the Canada Revenue Agency (CRA).

Grant limits

• The maximum annual grant is $3,500
• The maximum lifetime grant is $70,000

Exceptions to these limits occur in instances where the carry forward provision applies. For more information, refer to Chapter 9. RDSP Canada Disability Savings Grant, section 9.3. Grant room and carry forward and Chapter 10. RDSP Canada Disability Savings Bond, section 10.3. Bond limits and carry forward.

The grant may be paid into an RDSP on contributions made on or before December 31 of the year in which the beneficiary turns 49 years old.

In order to receive the grant, an income tax return should be filed every year. If no income tax return is filed, the Government of Canada will not be able to verify the beneficiary's family income.

The beneficiary will not be entitled to the higher matching rate and only the minimum grant payment will be made into an RDSP. However, for beneficiaries for whom an organization receives a special allowance under the Children's Special Allowances Act (CSAA) (for at least 1 month in the year), no income tax return is required to receive a grant at a matching rate of 300% and 200%.

For more information about grant eligibility criteria, information requirements, program related‑ rules, and application processes, refer to Chapter 9. RDSP Canada Disability Savings Grant.

Note: Income thresholds are indexed annually by the CRA.

1.1.2 The bond at a glance

The CDSB is paid into an RDSP by the Government of Canada. No contributions are required to receive the bond.

Depending on the beneficiary's family income, the Government of Canada may pay up to $1,000 annually in bond into an RDSP. The maximum lifetime limit for bonds is $20,000.

The bond may be paid into an RDSP made on or before December 31 of the year in which the beneficiary turns 49 years old.

In order to receive the bond, an income tax return must be filed every year. If no income tax return is filed, no bond payment will be made into an RDSP as the Government of Canada will be unable to verify the beneficiary's family income. However, for beneficiaries for whom an organization receives a special allowance under the CSAA, no income tax return is required for the bond to be paid.

Note: Income thresholds are indexed annually by the CRA.

For more information about bond eligibility criteria, information requirements, program related‑ rules, and application processes, refer to Chapter 10. RDSP Canada Disability Savings Bond.

1.1.3 Grant and bond entitlements and carry forward

As of January 2011, RDSP holders can claim unused grant and bond entitlements from the past 10 years. This applies for existing RDSPs and those opened in January 2011 and thereafter.

Note: Going back no further than 2008, the year that RDSPs became available.

To receive unused grant and bond entitlements, the beneficiary must:

• be eligible to receive the grant and bond
• have been eligible to receive the grant and bond in the years for which the carry forward is being requested

The contributions, the grant and the bond request must be made no later than the end of the year in which the beneficiary turns 49 years old. Contributions made after the year in which the beneficiary turns 49 will not attract grant.

The amount of grant and bond available is calculated for each previous year and depends on the beneficiary's family income in each of those years. The Government of Canada's matching rate will be the same as the one that would have applied if the contribution had been made in the year in which the grant entitlement was earned. The matching rate is paid in descending order, using up any grant entitlements (beginning with the oldest year or entitlement) at the highest available matching rate first, followed by those at lower rates.

Grants and bonds will be paid on unused entitlements, up to an annual maximum of $10,500 for grants and $11,000 for bonds.

1.2.1 Financial institutions

An issuer is a trust company that is licensed to provide trust services in Canada. In order to offer RDSP contracts to the public and administer the grant and the bond, the issuer must receive approval for an RDSP specimen plan from the CRA Registered Plans Directorate (RPD). Additionally, the issuer must sign an issuer agreement with ESDC.

The issuer may contract or delegate certain authorities to:

• an agent
• a service provider

Generally, an agent provides administrative services to clients. A service provider provides electronic support services on the issuer's behalf.

In accordance with the issuer agreement, when an agent is involved, usually it is the agent who:

• electronically transmits RDSP information to ESDC
• receives grant and bond payments
• sends grant and bond repayments to the Government of Canada

As per the issuer agreement:

"The issuer shall provide the Minister with the name of any agent that exercises the obligations referred to in subparagraph 2.9 (b) in the form and manner acceptable to the Minister, as outlined in the Canada Disability Savings Program (CDSP) - Notice of Delegation of Duties to an Agent form or such other form approved by the Minister.

It is understood that once the agent has been approved, the Minister shall deal directly with that agent in respect of those specific obligations, as those obligations shall have been deemed to have been performed by the issuer."

If the issuer enters into an arrangement with an agent to allow the agent to carry out administrative or other duties under the specimen plan, the issuer has the ultimate responsibility for the:

• specimen plan
• specimen plan trust

Generally, service providers provide support services regarding RDSPs as well as compile and forward electronic transactions to the CDSP system.

For purposes of this guide, the term financial institution is used to refer to the entity that is offering the RDSP product directly to clients, whether it is:

• an issuer
• an agent
• a service provider

If one of the terms issuer, agent or service providers is used, the information is specific to that type of entity only.

To offer RDSP contracts, an issuer must first submit a copy of its specimen plan to RPD for written approval to be able to:

• offer RDSP contracts
• enter into agreements with:
  • agents
  • service providers

The terms of the plan must meet the requirements of section 146.4 of the Income Tax Act (ITA). In addition, the issuer must have entered into an agreement with the Minister of ESDC to administer the grant and the bond.

Specifically, financial institutions:

• develop and manage systems to support delivery of the RDSP program
• prepare and submit grant/bond requests to ESDC
• accept responses to grant/bond requests from ESDC
• record and track funds on behalf of the grant and bond holders and recipients

1.2.2 ESDC

ESDC is a department of the Government of Canada.

ESDC's mission is to build a stronger and more competitive Canada, to support Canadians in making choices that help them live productive and rewarding lives, and to improve Canadians' quality of life.

ESDC ensures that children, families, seniors, and people with disabilities have the support and information they need to maintain their wellbeing and facilitate their participation in society.

ESDC is responsible for all the legislative aspects related to the CDSA and the Canada Disability Savings Regulations (Regulations).

1.2.3 The CRA

The CRA is responsible for the administration of the ITA and oversees:

• tax laws for the Government of Canada and for most provinces and territories
• various social and economic benefits and incentive programs delivered through the tax system

1.3.1 The financial institution

In terms of establishing RDSPs, the roles and responsibilities of financial institutions include:

• offering RDSPs to the public and striving to ensure that its premises and services are accessible to people with disabilities
• obtaining the beneficiary's SIN as well as the SIN or the business number (BN) of each entity that becomes a holder of an RDSP (ITA 146.4(2)(b))
• collecting contract registration information and providing the information to the Government of Canada
• ensuring that RDSP contracts are in compliance with the terms and the conditions for registration
• submitting an application to ESDC for the grant or the bond on behalf of the holder
• receiving and depositing grant or bond to the proper RDSP account
• informing the holder of the RDSP account status (if grant or bond was paid or not)
• maintaining and submitting monthly records of RDSP transactions through the CDSP system
• making disability assistance payments (DAPs), if applicable and lifetime disability assistance payments (LDAPs) to the beneficiary
• repaying grant or bond, as required
• correcting errors in a timely manner
• keeping copies of all documents, books of accounts, and records for the CRA and ESDC compliance reviews

Note: This material must be kept for a period of 6 years following the year in which the RDSP is terminated.

1.3.2 The holder

The holder opens and manages the plan and signs a contract with the financial institution for the benefit of a beneficiary. The plan must have at least 1 holder at all times.

The holder deposits the contributions into the RDSP for the benefit of a beneficiary. The holder can also provide others with permission in writing to contribute to the RDSP.

Depending on the circumstances, a holder can be one of the following:

• the beneficiary
• a legal parent of the beneficiary
• a guardian, tutor, curator, or an individual legally authorized to act on behalf of the beneficiary
• a public department, agency, or institution legally authorized to act on behalf of the beneficiary
• a qualifying family member (beneficiary's parent(s), spouse, common-law partner, or siblings)
• a qualified entity that is given rights under the RDSP as successor or assignee of a plan holder

Joint holders are possible, such as in the case where 2 legal parents wish to enter into the contractual agreement with the FI. Alternatively, the holder can be a single entity.

The Budget 2012 announced that "qualifying family members" may become the holder of an RDSP that is opened for the first time for an adult individual whose contractual competence may be in doubt and who does not have a legal representative appointed under provincial legislation.

The Budget 2023 proposed to extend the temporary measure to the end of December 31, 2026, and to include adult siblings of the beneficiary. The proposed change was approved and came into force on June 22, 2023. This measure is intended to provide provinces and territories time to develop long-term solutions to address legal representation issues. An individual who becomes a holder of an RDSP under these rules will generally be able to remain a holder of the RDSP after 2026.

1.3.3 The beneficiary

The beneficiary is named in the RDSP by the holder. The beneficiary of the RDSP is the person who will receive the money from the RDSP.

The RDSP is operated exclusively for the benefit of the beneficiary. Once the holder has named the beneficiary of the RDSP, the decision is irrevocable, and the beneficiary must remain the same for the duration of the RDSP. A beneficiary can have only 1 RDSP at any given time.

1.4.1 The protection of information

Certain eligibility criteria associated with the RDSP and the bond and grant, require financial institutions to collect or verify information provided by the holder.

Consequently, 2 federal privacy laws are applicable the:

• Privacy Act (PA)
• Personal Information Protection and Electronic Documents Act (PIPEDA)

Federal and provincial privacy legislations stipulate how organizations in the private sector must manage the collection, storage, and use of personal information. Therefore, when assisting clients who are applying for the grant or the bond, it is important to be aware of and understand the privacy legislation in place within each jurisdiction.

Financial institutions can assure their clients that any information provided during the RDSP, and the grant and the bond application process will respect the client's privacy in compliance with federal and provincial privacy legislation.

1.4.2 The collection, use and sharing of personal information

For the purposes of registering an RDSP and applying for the grant and the bond, financial institutions must collect and share information about:

• the holder
• the beneficiary
• a child's parent(s), family members, legal guardian
• the PCG

1.6.1 Opening an RDSP

There are 3 steps in opening an RDSP.

1. Choosing the financial institution. A list of the financial institutions that offer RDSPs can be found on the Registered Disability Saving Plan website

2. Providing the required information:

• the holder who opens the RDSP must ensure that they provide the FI with all the relevant information about themselves
• they must also provide information about the primary caregiver (if applicable) and the person named as the beneficiary of the RDSP

3. Making a contribution or applying for grant and bond

• only the holder, or those who have received the written consent of the RDSP holder, may deposit contributions into the RDSP
• the contributions are made in trust to the financial institutions to be invested, used, or applied by the financial institution for the purpose of making payments to the beneficiary

Note: Contributions cannot be made if the beneficiary:

• has died
• is not DTC-eligible at the time of the contribution
• is not a Canadian resident
• is older than 59
• has reached the maximum lifetime contribution limit

Note: Contributions are required to trigger the grant. No contributions are required to trigger the bond.