About registered disability savings plans
A registered disability savings plan (RDSP) is a trust arrangement between a holder and an issuer (a trust company in Canada). The purpose of this plan is to provide for the long-term financial security of a beneficiary who has a prolonged and severe physical or mental impairment. The beneficiary named under an RDSP must be eligible to receive the disability tax credit.
Contributions can be made to the plan by the beneficiary, by their parents or family members, or by other authorized contributors. Contributions are not tax deductible. However, earnings on the contributions are tax-exempt while they stay in the plan.
Payments in the form of Canada disability savings grant or Canada disability savings bond may be added to RDSP contributions. The Canada Disability Savings Program provides these payments and is administered by Employment and Social Development Canada (ESDC).
When grant, bond, and earnings are withdrawn as part of a disability assistance payment, they are taxable in the hands of the beneficiary.
Before marketing an RDSP, the issuer must send us a specimen plan for our approval so that we can make sure that the terms of the plan meet the rules of the Income Tax Act.
For more information on the RDSP program, see IC99-1R1.
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