Tax payable on non-qualified investment

A tax is payable for a calendar year in which the trust of an RDSP acquires property that is not a qualified investment, or, the property within the RDSP becomes a non-qualified investment.

Amount of tax payable

The amount of tax payable for a non-qualified investment is:

• for property acquired that is non-qualified investment, 50% of the FMV of the property when it was acquired; and
• for property that ceased to be a qualified investment, 50% of the FMV of the property immediately before it stopped being a qualified investment for the trust.

Each person who is a holder of an RDSP is jointly liable for the tax.

Payment of tax

If the holder of an RDSP is liable for this tax on a non-qualified investment, the holder must file Form RC4532, Individual Tax Return for Registered Disability Savings Plan (RDSP), with a payment for any balance no later than 90 days following the end of the calendar year.

Refund of tax

If the RDSP trust disposes of the non-qualified investment before the end of the calendar year following the calendar year in which the tax arose, the persons who are liable for the tax may be entitled to a refund of the lesser of:

• the amount of the tax paid; and
• the proceeds of disposition of the property.

However, no refund will be issued if it is reasonable to expect that those persons knew or should have known, when the property was acquired by the RDSP trust, that the property was, or would become, a non-qualified investment.

Date modified:

2016-12-01