Which part of the RDSP is taxed?

Your RDSP can include up to four types of contributions. These are your personal contributions, the government contributions (grants and bonds), investment income, and proceeds from a rolled-over amount. Personal contributions are considered after-tax dollars and will never be taxed upon withdrawal. Grant and bond amounts, investment income, and any proceeds from a rolled-over amount are taxable, but only if you withdraw a certain amount.


When your money is in an RDSP, you do not pay tax on it.

When you begin to take money out of your RDSP, you may pay tax on part of it. Your financial institution will withhold this tax before providing you with your withdrawal only once the taxable portion of your withdrawal is more than the total of two non-refundable tax credits, the basic personal amount (BPA) and the disability amount (DA). They will use the federal maximum amount in their calculations, which for 2022 is $14,398 for the BPA plus $8,870 for the DA. This means that if the taxable portion of your withdrawals in 2022 are equal to or below $23,268 there will be no tax withheld at the source.

If there is tax that is going to be withheld, the RDSP issuer (your financial institution) will automatically make a withholding for tax before issuing the payment. This is not the same as paying the tax. Instead, the financial institution will report both the gross taxable amount and the withholdings to the Canada Revenue Agency (CRA) and to the beneficiary through a tax form.

Note also that if the holder is not the beneficiary they may not receive the tax form. One way to avoid this is for the holder to have authorized access to the account of the beneficiary at the CRA. If the taxable amount withheld was too high, the beneficiary will receive the over-taxed amount back after filing that year’s income tax return. If the holder wishes to get an idea of what the taxable portion would be before making a withdrawal, they could either call Employment and Social Development Canada at 1-866-204-0357 or 1-866-754-2674 (this will be accurate only if the issuer has been reporting the earnings), or they could call their issuer.

For more information on taxation of withdrawals, please visit the link below: