RRSPs and RRIFs ->
Withholding tax on RRIF and RRSP withdrawals
What
tax is deducted from RRIF or RRSP withdrawals?
When a single lump sum amount is withdrawn from an RRSP, the amount of
tax that
will be withheld is:
| Withdrawal Amount |
% Tax Withheld |
| From $0 to $5,000 |
10% (5% in
Quebec) |
| From $5,001 to $15,000 |
20% (10% in
Quebec) |
| Greater than $15,000 |
30% (15% in Quebec) |
For funds held in the province of Québec, there will also be provincial
income tax withheld.
Note that the above withholding tax amounts are only estimates, which you will
show on your tax return as taxes already remitted. The withdrawal amount
will be included in your taxable
income. Your total taxable income
will determine the total taxes payable.
No tax is withheld when the minimum
amount is withdrawn from a RRIF. When
withdrawals in excess of the minimum amount are made, the
above RRSP lump sum withholding tax rates apply. For
further information on this topic, see the Canada Revenue Agency (CRA) document Withholding
tax on payments from a RRIF.
The withdrawal from the RRIF is included in the taxpayer's
taxable income, so depending on the individual's circumstances, tax may be
payable when the tax return is filed.
The minimum withdrawal amount is waived in 2007 for
RRIF owners who turn 70 or 71 in 2007, and in 2008 for RRIF owners who
turn 71 in 2008. However, withdrawals up to the normal minimum
withdrawal amount will still not be subject to withholding tax. See
the Canada Revenue Agency (CRA) 2007 Budget Questions and Answers re RRIF
tax withholding rules.
See our article about CRA
warnings regarding schemes which promise tax-free RRSP or RRIF withdrawals.
If you want to see how you can shelter your RRSP withdrawals
to save tax, see our article Get your money out of
RRSPs tax-free (sort of).
Tax Tip: Get
INDEPENDENT advice from a tax professional before investing
in tax-saving "schemes" that promise to get your money out
of your RRSP without paying tax.
Revised: June 16, 2010
