English
i am here
stdClass Object
(
    [term_id] => 105
    [name] => Tax Law
    [slug] => tax-law
    [term_group] => 0
    [term_order] => 18
    [term_taxonomy_id] => 105
    [taxonomy] => topics
    [description] => 
    [parent] => 0
    [count] => 0
    [filter] => raw
)
{"ontario":"75043","alberta":"75100","british-columbia":"75100","manitoba":"75100","new-brunswick":"75100","nl":"75100","nwt":"75100","nova-scotia":"75100","nunavut":"75100","pei":"75100","quebec":"75100","saskatchewan":"75100","yukon":"75100"}

Empire Tax Top ONEmpire Tax Top ON

RRSP withdrawals and tax consequences

Region: Ontario Answer # 182

Many people wait until they retire to withdraw money from their RRSP. This is because when you retire, your income usually decreases, so that when you add your income for the year to the amount that you withdraw from your RRSP, your total income is still low enough to keep you in a lower tax bracket. Depending on the type of RRSP investment you purchase, you may be able to withdraw money at any time. When you withdraw money from your RRSP, it will be taxed as income, and a withholding tax will apply at the time of the withdrawal. You must include the amount you withdraw on your tax return as part of your total income for the year. This will probably increase the amount of income tax you must pay.

If you withdraw RRSP funds under the Home Buyer’s Plan (HBP – $35,000 limit), or the Lifelong Learning Plan (LLP – limit of $20,000), however, it is not considered income, and is not taxed at that time. Also, there is no withholding tax when you withdraw the RRSP funds under those plans. Further, you are able to repay the amount you withdraw back into your RRSP.

Even if you are not retired, but your income is very low, you may want to withdraw money from your RRSP to supplement your income. Depending on where you live and the amount of money you want to withdraw, this may affect the tax bracket you are in. Also, once RRSP funds are withdrawn they cannot be repaid into the RRSP at a later date (unless withdrawn under a qualified Plan, such as the HBP or the LLP). This means that future contributions can only be made if you have unused contribution room.

Tax rates

In Canada, the current withholding tax rates for withdrawing funds from an RRSP are as follows:

  • 10% on amounts up-to $5,000;
  • 20% on amounts over $5,000 up-to and including $15,000; and
  • 30% on amounts over $15,000.

For general information, contact Canada Revenue Agency.

For legal advice and assistance with tax planning, a CRA tax dispute, or other tax issues, contact Tax Chambers LLP

Retirement ready?

You want to balance your mortgage, kids’ education, and retirement savings. Are you saving enough to meet your goals and be ready for retirement? An advisor has the expertise to get you on track to achieve your long-term goals, and can help you set realistic planning targets and stick to your plan. Contact an Empire Life advisor today for more information.


Empire Tax Bottom ONEmpire Tax Bottom ON

Tax Chambers Tax Law Ontario All Topics Sept 2017Tax Chambers Tax Law Ontario All Topics Sept 2017



								

You now have 3 options:

Was your question answered?


Yes    No


What information would you like to see added?


Submit an Edit Request










What are your changes?*

Page loaded. Thank you