Turning age 60 is a milestone for any RDSP holder, as the 10 year proportional repayment rule ends, and Lifetime Disability Assistance Payments (LDAPs) must begin. However, if a beneficiary is also receiving provincial supports such as ODSP, does this result in the loss of benefits?
Before age 65 – while still receiving provincial disability support
In most provinces, including Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, Newfoundland & Labrador, Nova Scotia, Yukon, NT and Nunavut, the RDSP is treated as both an exempt asset and an exempt source of income (as of 2026). Unlike employment income which has specific claw back rules, LDAP and/or DAP payments will not impact provincial disability cheques, so a beneficiary should continue to receive their full provincial disability support without reductions. This is significant because Canadians between the ages of 60 and 65 have not yet transitioned from provincial disability payments to OAS and GIS.
What about Quebec, PEI & New Brunswick? As of 2026 they have a partial exemption. This means that there is a potential impact based on the amount of the LDAP payment.
Age 65 – the transition to OAS and GIS
At age 65, eligible Canadians transition from provincial social assistance to federal benefits, including the Old Age Security (OAS) and the Guaranteed Income Supplement (GIS). When planning withdrawals, it is vital to understand that payments from an RDSP are fully sheltered from clawing back federal benefits.
Taxable Income – Unlike provincial benefits such as ODSP that treat RDSP payments as an exempt source of income, the taxable portions of an RDSP withdrawal are reported on Line 12500 a federal T1 tax return.
No GIS clawback – Even though RDSP payments are taxable, they do not reduce GIS entitlement. Line 12500 is excluded from the income calculation used to determine GIS eligibility.
No OAS clawback – Similarly, RDSP withdrawals are excluded from the net income calculation for OAS clawback.
What about taxes?
While RDSP withdrawals do not cause a loss of ODSP benefits, it is important to remember that they can still trigger a tax liability. Withdrawals from an RDSP are split into buckets and taxed differently depending on which bucket the money comes from. See the blog post on understanding RDSP withdrawals – How LDAPs are taxed for more information.