On August 4, 2010, PLAN submitted a ruling to CRA. Earlier that month, we had connected with BC Aboriginal Network on Disability Society and CLBC to talk about how the RDSP might be received by Aboriginal Canadians. There was excitement about the opportunity the RDSP provides, but some specific questions around taxation specific to Aboriginal people living on reserve. Our submission stated:
We have a question related to the Registered Disability Savings Plan (RDSP). For Aboriginal Canadians, what is the tax treatment of the RDSP?
The RDSP is an after tax saving plan matched by federal government grant and bonds. When the money is withdrawn after a long period of time (20+ years), the individual must pay tax on the government grant and bond + any investment income/ growth the plan may have realized. Is this the same for Aboriginal Canadians living on and off reserve? How is the investment income treated?
CRA responded to this query on March 11, 2011. You can read it here: taxation of RDSP payments to Aboriginals