JonboyE

Like you, I can't find any guidance on this. I have a horrible feeling the UK will tax based on the original purchase price. I can't find any reference to deemed disposition and repurchase of capital assets when you become tax-resident in the UK again.

dave2003

I too am going through gyrations regarding my RRSP here in Canada which at some time I will convert to an RRIF and have the proceeds paid to my bank in the U.K.

I have written to the CRA for a ruling on Canadian withholding tax on proceeds of an RRIF paid to a U.K. resident.

Here is part of my letter with a reference to Forum Magazine and Jamie Golombek, a well-known Canadian finance commentator on this subject.

According to the CRA bulletin “Schedule of Withholding Tax Rates on Payments to Non-Residents, updated Jan 2014” a resident of the U.K. will not have to pay Canadian taxes if the payments are in the form of a Periodic Pension Payment and do not exceed the minimum amount as set out in the Income Tax formula for calculating this amount.

However, looking at a non-CRA source-The Big Shell Out Abroad, 2005-01-01, Forum Magazine, by Jamie Golombek, it states that a periodic pension payment as defined under the Income Tax Conventions Act (ITCIA) is essentially a payment out of an RRIF that does not exceed the greater of twice the “minimum amount” for the year and 10 per cent of the fair market value at the beginning of the year. Golombek’s article states that under the U.K. / Canada tax treaty, there would be no Canadian withholding tax should I withdraw an amount each year that meets ITCIA definitions.

CRA’s withholding tax rates table, note 4 states that a periodic pension payment includes RRIF payments that do not exceed the threshold amount.

Which is correct, note 4 or Golombek’s article?



I went into an HMRC office in Canterbury, Kent to inquire about this, and they were no help.

Editha

Look at the tax convention. It is specifically mentioned.

Biggles1964

So to summarize, there is only one way to pay minimum tax on an RRSP/RRIF. Withdraw the mandated amount each year - it will not be taxed by CRA - see http://taxinterpretations.com/?page_id=1968 . Since this payment is defined as pension, then HMRC will tax you at 90% of that amount.
It does seem that the DT4617 interpretation is grossly unfair and not in the spirit of the double taxation agreement, you will be hit about 70% of your savings.

Stitcher

When you convert an RRSP to RRIF, if you are living in the UK, you can withdraw annually 10% of the capital sum at December 31st of the previous year.

This sum is not taxed in Canada ( at present ) but is taxable in the UK to the extent of 90%. So a $10,000 withdrawal would go on your UK tax return as $9,000. If you take regular monthly drawings from the RRIF it may well be that it will be taxed in Canada - something to check with the institution in Canada holding your RRIF.

If you withdraw from an RRSP you have Canadian withholding tax at whatever the applicable rate is for the amount withdrawn and under the UK double taxation treaty no further tax would be payable, unless you were a higher tax rate payer in the UK on the amount withdrawn. It used to be that you could file a Canadian tax return to recover the withholding tax - this dependent on your total Canadian income for the year that the funds were withdrawn - not sure if this is still the case. It was the case that Canada gave a taxpayer a personal allowance irrespective of being resident.

celine_uk

im also moving back in a month, after reading all of the posts i feel like i should cash in my whole RRSP and by 30% tax as im a canadian resident.

Stitcher

It obviously would depend upon the total value of your RRSP before deciding whether to collapse it entirely and pay the applicable withholding tax. The Canadian withholding tax was/is tiered to the amount withdrawn except in Quebec. If you do intend to dispense with the Canadian RRSP option of converting to a RRIF at 65 ( or later ) then I would consider annual RRSP withdrawals in an amount for minimum withholding tax. If you are not taxable in the UK you could then file a Canadian tax return and obtain a refund of the withholding tax, although you could do that anyway and declare the income in the UK - the latter was an option last time I made an RRSP withdrawal. I now have my RRSP converted to a RRIF, with annual periodic payments and no withholding - but taxed in UK at 90%.

Stitcher

PS. You would only get the tax refund in Canada if it was below your personal allowance and to the extent that you would have obtained a refund as a Canadian resident for tax purposes.

dave2003

Thanks for the information, it is very helpful. To further clarify things could I take your quote above as meaning that 90% of my RRIF periodic monthly pension payments, remitted to my bank in the U.K. would be subject to tax at the U.K. tax band I would fall into-in my case, the basic rate?

Thanks again.

Dave 2003

Stitcher

Yes. When you prepare your UK tax return you only put in the amount representing 90% of the funds received from Canada and pay tax accordingly.

dave2003

Thanks a bundle

maddie1959

Hi hope you don't mind me jumping in ,i'm so confused .
I live in Quebec for last 35 years , and spoke to everyone under the sun today regarding this issues .Grrrrrrrrrr

They told me , two years after leaving Canada I can take all my locked in pension , rsp, rif etc out with 0 penalty .but can not take any of it befor that ?

I then spoke to international canada revenue here , whom said yes, but will pay 25% tax if take in a lump sum , but pay 0 tax if take in periodic payments,that will be determined by the institution were my investments are held ?
now if Im understanding right all this will be taxed at 90% in England ?



beginning to think i'm making a mistake in going home

Help

maddie1959

Hi I posted ? on some one else space , but just read yours , I was told I can not cash in until two years after leaving ?

confused

Lyn Madeleine

maddie1959

Any advice on what to do before leaving .And what needs to be taken care of when get there would be helpful. Been in quebec 35 years , 55 year old thinking going home in a few months .
can anyone give me an idea of shipping furniture, cost ,time frame etc.

thanks Lyn Madeleine

dave2003

I sympathize with you-sometimes it is difficult to get information about taxes on RRIF payments made in the U.K.

Try looking at the following:

http://<b>www.cra-arc.gc.ca/tx/rgstr...g-eng.html</b>

and the Income Tax Conventions Interpretations Act.

which state that a periodic pension payment made in the U.K. from an RRIF will not be taxed in Canada. Subject to the tax treaty and ITCIA. However, other RRIF payments may be taxed in Canada.

Similarly, CPP and OAS payments made to a U.K. resident (non resident of Canada for tax purposes) will not be taxed in Canada.

For RRSP payments made in the U.K. a good starting point is:

https://www.google.ca/#q=uk+tax+on+canadian+rrsp

Under article 17 of the U.K/Canada Tax Treaty, various paragraphs, 90% of your RRIF periodic pension will be subject to U.K. tax at the U.K. taxation band into which you fall. It does not mean that you will pay 90% tax on your RRIF periodic pension. Stitcher's post of 23 Oct 2014 gives an example.

The U.K. taxes income as follows:

If your taxable income's over £31,865 above your Personal Allowance, you pay: 20% basic rate tax on the first £31,865. 40% higher rate tax on taxable income between £31,865 and £150,000. 45% additional rate tax on taxable income over £150,000. U.K. personal allowance is £10,000.00

I am no expert, so as always it is best to get advice. Other than professionals, some of the best advice I got was on Brit Expats from those back home who have direct experience of paying tax in the U.K.


Good luck.