Put money into a registered disability savings plan

From: Canada Revenue Agency

Contributions

The person or organization who enters into a registered disability savings plan (RDSP) agreement with a participating financial institution has the authority to contribute to that RDSP. They can also authorize others to make contributions to the RDSP by giving the financial institution their written consent.

The financial institution can accept contributions from authorized individuals and organizations if:

Contributions are not tax deductible. However, earnings on the contributions are tax-exempt while they stay in the plan.

Government grant 

An eligible person or organization can apply for the beneficiary to receive Canada disability savings grants. After the application is made, the Government of Canada will deposit matching grants of up to 300 percent, into a beneficiary’s RDSP. The amount of grants deposited depends on the beneficiary's family income and contribution(s) to the RDSP. The beneficiary can receive a maximum amount of $3,500 in grants per year. If the beneficiary has unused grant entitlements then they can receive a maximum amount of $10,500 in grants per year. There is a contribution limit of $70,000 over the beneficiary’s lifetime. Grants are paid on contributions that are made up to and including December 31 of the year the beneficiary turns 49 years of age.

Contributions that are paid to an RDSP after the annual grant deposit limit is reached will not receive matching grant. Contributors cannot receive a refund of their contributions after they are put in an RDSP. RDSP administrators should ensure that authorized contributors are aware of these rules.

For details: Canada disability savings grants and bonds.

Government bond

If an eligible person or organization applies for the beneficiary to receive Canada disability savings bonds, the Government will deposit bonds into the RDSPs of low and modest income beneficiaries. If a beneficiary qualifies, they can receive up to $1,000 a year in bond, depending on their family income. The lifetime bond limit is $20,000. Bonds are paid into the RDSP if an application to receive bonds has been made on or before December 31 of the year the beneficiary turns 49 years of age.

For details: Canada disability savings grants and bonds.

Retirement savings rollovers

A retirement savings rollover is a tax-deferred transfer of funds from a deceased parent or grandparent’s registered plan(s) to a beneficiary’s registered disability savings plan (RDSP). The beneficiary must be financially dependent on the parent or grandparent immediately before their death. 

The beneficiary’s financial dependency must be due to their mental or physical disability. Only eligible funds can be rolled over. These are:

The financial institution administering the RDSP can authorise a retirement savings rollover if:

A retirement savings rollover does not attract the Government grant. 

For more information on conditions and processing requirements, see Part I – Rollovers in IC99-1R Registered Disability Savings Plans.

Education savings rollovers

An education savings rollover is a tax-deferred transfer from a beneficiary’s registered education savings plan (RESP) to their registered disability savings plan (RDSP). An education savings rollover does not attract the Government grant.

These conditions must be met for an education savings rollover to take place:

The financial institution administering the RDSP can accept an education savings rollover if:

For more information on conditions and processing requirements, see Part I – Rollovers in IC99-1R Registered Disability Savings Plans.

Related links:

Income Tax Act, Section 146.4
Income Tax Act, Section 146.1(1.1) and (1.2.) 
Income Tax Act, Section 60.02

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