Tax payable

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Tax payable on disability assistance payments (DAPs)

When a DAP is made from an RDSP, the part of the payment that includes proceeds from a rolled over amount, the grants and bonds paid into the plan and all investment income earned in the RDSP, such as interest, is taxable.

That part of the payment is included in the income of the beneficiary for the year in which the payment is made. If the beneficiary is deceased when the payment is made, the amount is included in the income of the beneficiary's estate for the year of the payment.


The taxable portion (or RDSP income) is excluded from income when calculating various income-tested benefits, such as the GST/HST credit, the Canada child benefit (CCB), and the Canada workers benefit (CWB). It is also excluded when calculating the social benefit repayment and the refundable medical expense supplement.

Tax deduction at source

RDSP issuers will have to withhold income tax at source once the taxable portion of a beneficiary’s  lump sum DAPs and LDAPs exceed the total of the following two federal non-refundable tax credits (NRTCs):

NRTCs help to reduce a taxpayer’s total income tax liability at the end of the year. There are many federal and provincial NRTCs that individuals may be eligible to claim when filing their personal income tax and benefit returns. However, only the federal maximum BPA of $15,000 and federal DA ($9,428 in 2023) are to be used to calculate the taxable income from which to withhold income tax at source. This is because all RDSP beneficiaries are eligible for these two NRTCs.

Using the chart on this page, with the 2023 tax year for example, a beneficiary can receive up to $24,428 (BPA of $15,000 + DA of $9,428) in taxable lump sum DAPs and LDAPs before the RDSP issuer has to withhold income tax at source. For the 2022 tax year, this amount was $23,268.

Withholding thresholds
Year         2023        2022
Federal maximum Basic Personal Amount (BPA) $15,000 $14,398
Federal Disability Amount (DA) $9,428 $8,870
Total $24,428 $23,268

Once this amount is reached, income tax must be deducted from the taxable portion of all remaining payments in the year using the lump-sum tax withholding rate displayed below.


NRTCs are adjusted annually to allow for inflation and other factors.

The taxable portion of a beneficiary’s lump sum DAPs and LDAPs are the total of:


Individual or private contributions, or an amount in respect of which a holder of the plan pays the advantage tax (unless this tax is waived, cancelled or refunded, or has previously been included in the non-taxable portion of a DAP made to the beneficiary) are not taxable.

RDSP issuers will use the lump-sum withholding rate that corresponds to either the:

The lump-sum withholding rates are:


The above rates are a blend of the federal and provincial rates. The Quebec rates represent only the federal rates. For more information on the provincial rates for the province of Quebec, go to Revenue Québec.

Tax payable on non-qualified investments

If the RDSP trust acquired property that is not a qualified investment, or, the property within the RDSP becomes a non-qualified investment.


The issuer of an RDSP must exercise the care, diligence and skill of a reasonably prudent person to minimize the possibility that a trust governed by the plan holds a non-qualified investment. If the issuer fails to comply with this obligation, the issuer is liable to a penalty under the Income Tax Act. The issuer is also required to notify the holder of the RDSP, in prescribed form and manner before March of a calendar year, if at any time in the preceding year the RDSP trust acquired or disposed of a non-qualified investment, or if an investment became or ceased to be a non-qualified investment.

Tax payable for inadequate consideration

The tax payable for inadequate consideration is repealed effective after March 22, 2017.

Tax payable on an advantage

If the holder or a person not dealing at arm's length with the holder (including the RDSP itself) was provided with an advantage in relation to their RDSP during the year a 100% tax is payable, which is:  

For taxes payable on an advantage, you must file using Form RC339, Individual Return for Certain Taxes for RRSPs, RRIFs, RESPs or RDSPs.

When an advantage is extended by the issuer of an RDSP, the issuer, and not the holder, is liable for the tax. The issuer must file Form RC298, Advantage Tax Return for RRSP, TFSA, FHSA, or RDSP issuers, RESP promoters or RRIF carriers, with a payment for any balance due, no later than June 30 following the end of calendar year.

For more information, see Income Tax Folio S3-F10-C3, Advantages – RRSPs, RESPs, RRIFs, RDSPs, and TFSAs.

Tax payable on use of property as security

The tax payable for use of property as security is repealed effective after March 22, 2017.

Tax payable on prohibited investments

If the RDSP trust acquires a prohibited investment or if previously acquired property becomes prohibited, the investment will be subject to a special tax equal to 50% of the fair market value (FMV) of the investment, and the holder must file Form RC339, Individual Return for Certain Taxes for RRSPs, RRIFs, RESPs or RDSPs with a payment for any balance due, no later than June 30 following the end of the calendar year.

The tax is refundable in certain circumstances. For more information, see Refund of taxes paid on non-qualified or prohibited investments on this page.

If the prohibited investment ceases to be a prohibited investment while it is held by the RDSP trust, the RDSP trust is considered to have disposed of and immediately re-acquired the property at its FMV.  

The holder is also liable for the 100% advantage tax on income earned and capital gains realized on prohibited investments.

The 100% advantage tax applies to income earned and the portion of any realized capital gain that accrued, after March 22, 2017, regardless of when the prohibited investment generating the income or gain was acquired.

If an investment is both a non-qualified investment and a prohibited investment, it is treated as a prohibited investment only.

For more information, see Income Tax Folio S3-F10-C2, Prohibited Investments – RRSPs, RESPs, RRIFs, RDSPs and TFSAs.

Waiver or cancellation of tax

We may waive or cancel all or part of any of the taxes if we determine it is fair to do so after reviewing all factors, including whether:

A waiver refers to penalties and interest otherwise payable by a taxpayer for which relief is granted by the CRA before these amounts are assessed or charged to the taxpayer. A cancellation refers to penalties and interest amounts that were assessed or charged to the taxpayer for which relief is granted by the CRA.

The waiver is limited to tax paid under the anti-avoidance rules and not taxes paid under any other part of the Income Tax Act. To consider your request, we need a letter that explains why the tax liability arose, why this is a reasonable error, and why it would be fair to cancel or waive all or part of the tax.

Send your letter to one of the following addresses:

If your residential address is based in: Send your request to:
Ontario, Prince Edward Island, Newfoundland and Labrador, Yukon, Nunavut, Northwest Territories, as well as the following cities in the province of Québec (Montréal, Quebec City, Laval, Sherbrooke, Gatineau, and Longueuil). Canada Revenue Agency
Sudbury Tax Centre
Pension Workflow Team
Post Office Box 20000, Station A
Sudbury ON  P3A 5C1
Manitoba, Saskatchewan, Alberta, British Columbia, Nova Scotia, New Brunswick, and the remaining areas in the province of Québec not listed under the Sudbury Tax Centre. Canada Revenue Agency
Winnipeg Tax Centre
Pension Workflow Team
Post Office Box 14000, Station Main
Winnipeg MB  R3C 3M2

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