jimf

What are the tax rules for taking money out of an RRSP? I'd quite like to take all the money out before I leave Canada.

Aviator

What you withdraw will be added to your income for that tax year, which may change your tax band.

http://www.getsmarteraboutmoney.ca/e...x#.WDJR5SRvB5Y

jimf

So the withholding tax is deducted on withdrawal and you could pay more or less tax on it depending on your overall taxable income at the end of the year?

plasticcanuck

That is correct.

jimf

What is the tax situation if the rrsp withdrawal is made after leaving Canada?

plasticcanuck

The same, I believe. Withholding tax and adjustment up or down when you file Canadian ITR. A T4RSP will be issued by Planholder, so CRA will be looking for a return showing the redemption.

JonboyE

If the recipient is non-resident at the time of the withdrawal there will be Part XIII tax at 25%. The planholder will issue an NR4 slip. The Part XIII tax is the recipients complete and final tax obligation to Canada and they are not required to (in fact, cannot) file a tax return for this income.

Edo

What if he doesn't declare himself non-resident and withdraws from his RRSP bit by bit every year within the lowest tax band? That way it would be classed as his income when he files Canadian taxes but since the withdrawal amount would be so low he wont be taxed on it.

JonboyE

A person's residence for tax purposes is a matter of fact, not what that person chooses to declare. If someone is tax-resident in the UK but does not tell the CRA in order to avoid paying tax that is fraud.

HMRC and CRA do talk to each other.

JamesM

Sounds like a lot of work to not save all that much money.

thistlehollyberry

I understand from our accountant that if you don't declare yourself non-resident the CRA can tax you on your earned income abroad. I know this because our son lives overseas and had to complete a form to declare himself non-resident in order to avoid paying income tax on his overseas earnings. One of our accountant's clients moved overseas without informing the CRA and ended up owing $$$$ to the CRA years later.

Aviator

You don't 'declare' yourself non resident. You either are a resident for tax puposes or you are not, depending on set criteria. Whether you think you are non resident may not be what CRA decide.

Non-residents of Canada

Individuals - Leaving or entering Canada and non-residents

thistlehollyberry

Our son completed a form and sent it to CRA. He received a confirmation letter that he was deemed a non-resident. The accountant stressed that this letter should be kept so he would have a record of this decision.

Aviator

A CRA decision based on a tax payer request. One does not declare' oneself non resident.