If the beneficiary recovers from their disability, they must close their RDSP.
Closing the RDSP
A beneficiary is considered to have recovered from their disability if they no longer qualify for the Disability Tax Credit.
Their RDSP must be closed by December 31 following the first calendar year that they no longer qualify. Here's what happens to the funds:
- Any government grants and bonds that haven't been in the RDSP for at least 10 years must be repaid to the government.
- The beneficiary will receive any funds left in the RDSP after any government grants and bonds are repaid.
You must close your RDSP if you recover from your disability.
Tax consequences
The beneficiary may have to pay tax on the portion of the money in the RDSP that comes from:
- government grants and bonds held in the RDSP for more than 10 years, and
- investment earnings.
The beneficiary won't pay tax on the portion that comes from contributions made to the RDSP.
You'll have to repay any government grants and bonds that have been in the RDSP for less than 10 years.