Registration of a disability savings plan

A disability savings plan is automatically registered at the time the holder signs the contract and all conditions in subsection 146.4(2) of the Income Tax Act are met. You must electronically send the information to the Minister of Employment and Social Development (ESD) as soon as the plan is set up, or the contract’s registration will be nullified.

Notifying the government of Canada of the existence of an RDSP

The agreement that you enter into with the Minister of ESD will set out your obligations to give information to that Minister. The Canada Disability Savings Program - Interface Transaction Standards document sets out the required data elements you must collect and send to the Government of Canada.

Transferring an RDSP

An RDSP must permit property to be transferred to another RDSP of the beneficiary at the holder’s request. Transfers can only be made to another RDSP of the same beneficiary. The issuer must transfer all of the property from the RDSP directly to the issuer of the RDSP receiving the property. For the process to be confirmed, the issuer of the transferring plan must terminate the RDSP as soon as the funds have been transferred. The amount of the transfer is not included in any taxpayer's income.

The issuer of the transferring plan must give the issuer of the receiving plan all of the information in its possession needed for the new plan to comply with the rules of the Income Tax Act and the Canada Disability Savings Act.

The information the transferring issuer must give to the receiving issuer includes:

• Name, date of birth and social insurance numbers or business number, as the case may be, of the beneficiary and of each of the holders;
• The address of the beneficiary and of each of the holders.

The information must also include the dates and amount of all transactions previously made under the transferring plan, such as:

• Contributions;
• Administrative charges and fees;
• Disability assistance payments;
• Lifetime disability assistance payments;
• Payments of the Canada disability savings grant or bond;
• Repayments of the Canada disability savings grant or bond;
• Investment transactions (gains and losses); and
• Investment income.

If the beneficiary is at least 59 years of age before the year the transfer takes place (or any other age, if lifetime disability assistance payments have already begun), the receiving plan must agree to pay to the beneficiary any lifetime disability assistance payments that the transferring plan would have paid during the rest of the year had the transfer not taken place.

Closing an RDSP

The issuer must close the RDSP when the beneficiary dies or when the beneficiary no longer has a severe and prolonged impairment in physical or mental functions that markedly restricts the beneficiary's ability to carry out a basic activity of daily living (that is, when the beneficiary is no longer eligible to get the disability tax credit (DTC)). Unless a DTC election is made, amounts that are left in the plan (after taking into consideration any repayments under the Canada Disability Savings Act) are to be paid to the beneficiary or the beneficiary's estate.

If the issuer of the plan was not aware or was uncertain that the beneficiary of the plan had died or ceased to have a severe and prolonged impairment and did not terminate the plan as required, the plan would become non-compliant and subject to deregistration. The Minister of National Revenue may consider deferring or waiving the deregistration of a plan in these circumstances.

The holder can ask for the RDSP to be closed if there are no funds left in the plan, or if the only remaining amount is the assistance holdback amount. If there are funds left in the RDSP, they can be paid out as a disability assistance payment to the beneficiary. Any payment made must still respect the yearly minimum and maximum amounts. As a result, the plan might not be closed in the year requested by the holder.

For more information on the RDSP program, see IC99-1R1.