Chapter 2. RDSP Key concepts

From: Employment and Social Development Canada

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.

Alternate format

A PDF version of the Registered Disability Savings Plan provider user guide is available on the index page.

List of acronyms

AHA: Assistance holdback amount
BN: Business number
CDSA: Canada Disability Savings Act
CDSB: Canada Disability Savings Bond
CDSG: Canada Disability Savings Grant
CDSP: Canada Disability Savings Program
CRA: Canada Revenue Agency
DAP: Disability assistance payments
DSP: Disability Savings Plan
ESDC: Employment and Social Development Canada
ITA: Income Tax Act
LDAP: Lifetime disability assistance payments
RDSP: Registered Disability Savings Plan
SDSP: Specified Disability Savings Plan
SIN: Social insurance number
SIR: Social insurance registration

Introduction

Employment and Social Development Canada (ESDC) administers several legislative and program elements governing the delivery and administration of the:

Canada Disability Savings Grant (CDSG)
Canada Disability Savings Bond (CDSB)

In this guide, these elements are referred to as key concepts.

Understanding these key concepts will allow Registered Disability Savings Plan (RDSP) issuers to assist the holder in applying for and receiving the CDSG and the CDSB for which the beneficiary qualifies.

2.1 Legislative authorities: ESDC and the Canada Revenu Agency (CRA)

ESDC and the CRA work together in administering the CDSG and the CDSB under these legislative authorities of the:

Canada Disability Savings Act (CDSA), which authorizes payment of the:
- CDSG
- CDSB
Canada Disability Savings Regulations (Regulations) set out the requirements for the:
- payment of the CDSG and the CDSB
- terms and conditions of the issuer agreement
- authorization on the collection of information
Income Tax Act (ITA) governs RDSPs

2.1.1 The CDSA

The CDSA:

establishes the CDSG and the CDSB
outlines some of the conditions and obligations with respect to the payment and repayment of the CDSG and the CDSB
establishes the amount of CDSG that may be paid into a beneficiary's RDSP in respect of contributions made to the plan
establishes the amount of CDSB that may be paid
sets out the conditions and obligations related to the payment of CDSG and CDSB

2.1.2 The Regulations

The Regulations complete the legal framework established by the CDSA for the payment and repayment of the CDSG and the CDSB as well as ensure consistent treatment and application of program rules.

The Regulations also establish the:

requirements for the payment of the CDSG and the CDSB
terms and conditions that must be included in the agreements between ESDC and the issuer authorized to offer the RDSP
circumstances under which the CDSG and the CDSB must be repaid
type of personal information that may be collected by ESDC which is disclosed to the CRA

2.1.3 The ITA

Section 146.4 of the ITA provides measures that allow for the creation and the administration of the RDSP. The RDSP is the vehicle used for depositing the CDSG and the CDSB. The ITA sets clear guidelines on the conditions required for the Disability Savings Plan (DSP) of a beneficiary to become an RDSP.

The ITA describes the:

eligibility criteria for holders and beneficiaries
types of payment that can be made from the plan
contribution limits
taxation of the disability assistance payment (DAP) and the lifetime disability assistance payment (LDAP)

2.2 RDSP

The RDSP is a long-term savings plan designed to help persons with disabilities save for the future. The holder initiates the RDSP registration process by entering into a DSP with an RDSP issuer and requesting that the DSP be registered with the CRA. Once successfully registered, the DSP becomes an RDSP and, as such, the repository for contributions, grants or bonds, and accumulated earnings. For more information, refer to Chapter 3. RDSP Registered Disability Savings Plan.

The payment of the CDSG and the CDSB has specific requirements. These are addressed in the related chapters. For more information, refer to Chapter 9. RDSP Canada Disability Savings Grant and Chapter 10. RDSP Canada Disability Savings Bond.

2.3 Specified Disability Savings Plan (SDSP)

A SDSP is a measure to provide beneficiaries who have a shortened life expectancy with greater flexibility to access their RDSP savings. Withdrawals from an SDSP will not trigger a repayment of the assistance holdback amount (AHA) (or the proportional repayment rule). For more information, refer to Chapter 14. RDSP repaying the grant and bond. To designate the RDSP as an SDSP, the holder needs to make an election. For more information, refer to Chapter 5. RDSP Specified Disability Savings Plan.

However, once the election is made no contributions can be made, and the plan will not be entitled to any new CDSG or CDSB. Furthermore, beneficiaries will not be eligible to carry forward any CDSG or CDSB amounts for those years. Education savings rollovers are not permitted when the plan is an SDSP; only rollovers of retirement savings proceeds are permitted.

The SDSP designation will be removed if the holder requests that the election be reversed or if any of the SDSP conditions is broken.

2.4 RDSP contribution limits

There is no annual limit for contributions, but there is a lifetime limit of $200,000.

2.5 Social insurance number (SIN)

The SIN is a key information element used by the Canada Disability Saving Program (CDSP) system.

To establish and register a DSP, a SIN is needed for the beneficiary and all holders. A business number (BN) is needed if the holder is a public department, agency, or institution.

The CDSB requires additional SIN information for the primary caregiver. Therefore, when applying for CDSG or CDSB, refer to the following chapters:

2.5.1 SIN: A unique identifier

A SIN is needed for the beneficiary to establish and register a DSP.

The beneficiary's SIN is used by the CDSP system to:

provide the CRA with registration information about the plan
record RDSP activities
pay CDSG or CDSB

2.5.2 Importance of accurate information

The beneficiary's SIN is subject to rigorous validation checks. To ensure payment of the CDSG and the CDSB, it is critical to verify the accuracy of the beneficiary's SIN and associated information when completing the RDSP process and applying for the CDSG and the CDSB. Inaccurate SIN information will delay the DSP's registration as well as the approval of the payments of the CDSG and the CDSB.

The beneficiary's SIN is electronically validated with the ESDC social insurance registration (SIR) database in the following manner:

every transaction of the beneficiary information is validated with SIR to ensure the following information reported on the transaction corresponds with the information held at SIR:
- SIN
- given name
- surname
- birth date
- gender
if the SIR reports that the information provided in the transaction does not match its records, then the CDSP system rejects the transaction and reports the error to the issuer in the error report
CDSG and CDSB payment will be delayed until the correction is made and resubmitted to the CDSP system and successfully validated at the SIR

2.5.3 The holder's SIN or BN

To establish and register a DSP, the holder must provide the financial institution with their SIN.

If the holder is a public department, agency, or institution that is legally authorized to act on behalf of the beneficiary, the business name, address, and BN must be provided to the issuer to establish and register a DSP.

2.5.4 Applying for a SIN

The SIN application form and instructions can be obtained from any Service Canada office or online on the SIN page.

2.6 The RDSP account

An RDSP is comprised of the following:

contributions made to the RDSP by the holder (or by any entity with the written permission of the holder), including rollovers
CDSG
CDSB
provincial incentives
earnings

When a financial transaction is processed for the beneficiary, funds are deposited into or withdrawn from the RDSP.

The CDSP system tracks these various activities to ensure CDSG and CDSB limits are not exceeded. If these limits are exceeded, the plan may risk losing its registration status.

RDSP issuers must track financial transactions within the beneficiary's RDSP.

2.7. Key concepts specific to CDSG and CDSB

There are other important key concepts that are associated with, and unique to, each of the CDSG and the CDSB. These are defined and elaborated in the following chapters:

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Date modified:: 2025-06-20

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