Registered Disability Savings Plan provider user guide - Introduction

1.1. The Grant at-a-Glance

The Canada Disability Savings Grant (grant) is a matching grant paid into an RDSP by the Government of Canada.

Depending on the beneficiary's family income* and the amount contributed to the RDSP, the Government of Canada may pay matching grants of 300%, 200%, or 100%.

• 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. See Chapters 3-1, Section 3 – Grant Limits and Carry Forward and Chapters 3-2, Section 3 – Bond Limits and Carry Forward for more information on the carry forward provision.

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, only the minimum grant payment will be made into an RDSP as the Government of Canada will be unable to verify the beneficiary's family income for the higher matching rate. However, a beneficiary under the care of an organization that receives a payment under the Children's Special Allowances Act (for at least one month in the year) is entitled to receive a grant at a matching rate of 300% and 200% without having to file an income tax return.

To learn more about grant eligibility criteria, information requirements, Program-related rules and application processes, see Chapter 3-1: The Canada Disability Savings Grant (grant).

*Income thresholds are indexed annually by the Canada Revenue Agency.

1.2. The Bond At-a-Glance

The Canada Disability Savings Bond (bond) 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 on applications 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 Children's Special Allowances Act, no income tax return is required for the bond to be paid.

To learn more about bond eligibility criteria, information requirements, Program-related rules and application processes, see Chapter 3-2: The Canada Disability Savings Bond (bond).

*Income thresholds are indexed annually by the Canada Revenue Agency.

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 (going back no further than 2008, the year that RDSPs became available). This applies for existing RDSPs and those opened in January 2011 and after.

To receive unused grant and bond entitlements, the beneficiary must be eligible to receive the grant and bond, and must have been eligible to receive the grant and bond in the years for which the carry forward is being requested. The contributions and the grant and bond request must be made no later than the end of the year in which the beneficiary turns 49 years old.

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.

2.1. Financial Institutions

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

The issuer may contract or delegate certain authorities to an agent and/or a service provider. Generally, an agent provides administrative services to clients and a service provider provides electronic support services, both 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 and 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 – 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 ultimate responsibility for the specimen plan and the specimen plan trust remains with the issuer.

Generally, service providers provide support services regarding RDSPs as well as compile and forward electronic transactions to the Canada Disability Savings Program (CDSP) System.

For purposes of this guide, the term FI is used to refer to the entity that is offering the RDSP product directly to clients, whether it is an issuer, an agent or, rarely, a service provider. If one of the terms issuer, agent or service provider is used, the information is specific to that type of entity only.

To be able to offer RDSP contracts and/or enter into agreements with agents and/or service providers to enable them to offer RDSP contracts, an issuer must first submit a copy of its specimen plan to RPD for written approval. The terms of the plan must meet the requirements of section 146.4 of the Income Tax Act. In addition, the issuer must have entered into an agreement with the Minister of ESDC to administer the grant and the bond.

Specifically, FIs 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; and record and track funds on behalf of grant and bond holders and recipients.

2.2. Employment and Social Development Canada

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 Canada Disability Savings Act (CDSA) and the Canada Disability Savings Regulations (Regulations).

2.3. Canada Revenue Agency

CRA is responsible for the administration of the Income Tax Act and oversees:

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

3.1. The Financial Institution

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

• offering RDSPs to the public and strives 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 and/or the bond on behalf of the holder;
• receiving and depositing grant and/or bond to the proper RDSP account;
• informing the holder of the RDSP account status (if grant and/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 and/or bond, as required;
• correcting errors in a timely manner; and
• keeping copies of all documents, books of accounts, and records for CRA and ESDC compliance reviews. This material must be kept for a period of six (6) years following the year in which the RDSP is terminated.

3.2. The Holder

The holder opens and manages the plan and signs a contract with the FI for the benefit of a beneficiary. The plan must have at least one 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 or common-law partner)
• 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 two legal parents wish to enter into the contractual agreement with the FI. Alternatively, the holder can be a single entity.

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.

This temporary measure came into force on June 29, 2012 and will expire after December 31, 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 2023. As of 2024, a qualifying family member will only be able to open a disability savings plan when he/she is transferring an existing plan for which he/she is the holder.

3.3. The Beneficiary

The beneficiary is named on 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 one RDSP at any given time.

4.1. The Protection of Information

Certain eligibility criteria associated with the RDSP and the bond and grant, require FIs to collect or verify information provided by the holder. Consequently, two federal privacy laws are applicable:

• The Privacy Act (PA)
• The 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.

FIs 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.

4.2. The Collection, Use and Sharing of Personal Information

FIs must collect and share information about the holder, the beneficiary and a child’s parent(s), family members, legal guardian and/or primary caregiver for the purposes of registering an RDSP and applying for the grant and the bond.

4.2.1. Sharing of Client Personal Information

The authority of the Government of Canada to collect, use, and share personal information and other information included on the form, “Application for the Canada Disability Savings Grant and/or Canada Disability Savings Bond”, for the purposes described on the form, is provided under the Canada Disability Savings Act, the Department of Employment and Social Development Act and the Income Tax Act.

Once under the control of ESDC, that information is administered in accordance with all applicable laws including the Canada Disability Savings Act, the Privacy Act and the Department of Employment and Social Development Act. Once under the control of the CRA, that information is administered in accordance with all applicable laws including the Privacy Act and the Income Tax Act.

The information included on this form and the information regarding the RDSP may be used by and shared between ESDC, CRA, and the FI for the administration (which may include policy analysis, research and evaluation) of the Canada Disability Savings Act and the Income Tax Act.

Image Description

The following steps describe the collection, use and sharing of client personal information for RDSP contract registration and payment of grant and bond.

Step 1

The contract is created with the FI. The FI collects the following information from the grant and bond application form:

• Holder(s) name and SIN
• Beneficiary SIN, name, date of birth and address
• Eligible individual SIN (or BN), name and address

The FI also collects the following information from the RDSP contract:

• Holder(s) SIN (or BN) and name
• Beneficiary's SIN, date of birth and address

Step 2

The issuer reports to the ESDC.

Step 3

The CDSP System validates the information.

Step 4

SIR validates the information. ESDC sends the following information to the Social Insurance Registry for validation:

• Holder(s) SIN (or BN), name and date of birth
• Beneficiary SIN, name and date of birth

Step 5

CRA verifies the information. ESDC sends the following information to the Canada Revenue Agency for verification:

• Eligibility for the Disability Tax Credit
• Canadian residency
• Beneficiary's family income

Step 6

The contract registration is confirmed.

Step 7

The grant and bond is paid. Information is communicated back to the FI in their monthly reports.

6.1. Opening an RDSP

There are three steps in opening an RDSP:

Step 1: Choosing the financial institution
A list of the financial institutions that offer RDSPs can be found on ESDC’s website.

Step 2: Providing the Required Information
The holder who opens the RDSP must ensure that they provide the FI with all the relevant information regarding themselves, the primary caregiver (if applicable) and the person named as the beneficiary of the RDSP.

Step 3: Making a Contribution and/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 FIs to be invested, used, or applied by the FI for the purpose of making payments to the beneficiary.

Contributions cannot be made if the beneficiary has died.

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

6.2. Application and Payment Process

The following illustration provides an at-a-glance snapshot of the RDSP application and payment process.

Image Description

1. Holder opens Disability Savings Plan (DSP) and has it registered (RDSP)*. (See section 2, Registered Disability Savings Plan (RDSP))
2. Issuer assists holder to review the beneficiary's eligibility for the grant and bond.
3. Holder completes the application form*. (See section 3, Grant and bond and Chapter 3-3, Grant and/or Bond Application Process)
4. Facilitate any transfers between FIs*. (See section 2, Chapter 2-5 RDSP Transfers)
5. Issuer receives, deposits, tracks grant and bond payments in RDSP accounts.
6. Issuer submits repayment(s) if required*.
7. Issuer makes DAPs (if applicable) and LDAPs available to eligible beneficiaries*. (See section 2, Chapter 2-3 Payments – DAP and LDAP)
8. Holder closes RDSP*. (See section 2, Chapter 2-8 RDSP Closure)
   * Requires the submission of electronic transactions to the Canada Education Savings Program (CESP) via the CDSP System. For more information about submitting these transactions, see Chapter 4-1 The Interface Transaction Standards (ITS).

1.1. The Canada Disability Savings Act

The purpose of the CDSA is to encourage long term savings through RDSPs to help people with severe and prolonged disabilities and their families save for the future.

The CDSA establishes the CDSG and the CDSB and outlines some of the conditions and obligations with respect to the payment and re-payment of the CDSG and the CDSB.

The CDSA establishes the amount of CDSG that may be paid into a beneficiary’s RDSP in respect of contributions made to the plan and establishes the amount of CDSB that may be paid. The CDSA also sets out the conditions and obligations related to the payment of CDSG and CDSB.

1.2. The Canada Disability Savings 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, the terms and conditions that must be included in the agreements between ESDC and the issuer authorized to offer the RDSP, the circumstances under which the CDSG and the CDSB must be repaid, and the type of personal information that may be collected by ESDC which is disclosed to CRA.

1.3. The Income Tax Act

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

The ITA describes the eligibility criteria for holders and beneficiaries, the types of payment that can be made from the plan, the contribution limits and the taxation of the Disability Assistance Payment (DAP) and the Lifetime Disability Assistance Payment (LDAP).

5.1. SIN – A unique identifier

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

The beneficiary’s SIN is used by the CDSP System to:

• provide CRA with registration information about the plan;
• record RDSP activities; and
• pay CDSG and/or CDSB.

5.2. Importance of accurate information

The beneficiary’s SIN is subject to rigorous validation checks. In order 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 against the ESDC Social Insurance Registry’s (SIR) database in the following manner:

• Every beneficiary information transaction is initially validated with the SIR to ensure that the SIN, Given Name, Surname, Birth Date, and Gender reported on the transaction correspond with the information held on file at the SIR.
• 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.

5.3. The holder’s SIN or business number

To establish and register a DSP, the holder must provide the FI with his or her 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.

5.4. Applying for a Social Insurance Number

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