RRSP withdrawal for a non-resident

kastoori · Post by **kastoori** » Thu Dec 16, 2010 7:15 pm

Hi,

I am a canadian citizen not residing in Canada for the past 3 yrs. I have some RRSP funds that I wish to withdraw. I am not sure if there is a specific process to follow in order to do that(any specific forms to be filled) and also what would be the applicable taxes. Appreciate if anyone can clarify the exact rules on this / point me to the applicable info.

I can across this on the CRA website, but dont quite follow the info in the document.
"For non-residents of Canada, withholding is 25% unless reduced by a treaty. See IC76-12R6, Applicable rate of part XIII tax on amounts paid or credited to persons in countries with which Canada has a tax convention."

Greatly appreciate if someone who knows this can help me out.

Thanks!

nelsona · Post by **nelsona** » Thu Dec 16, 2010 9:40 pm

Since you didn't say what country you are from, I'll assume US and tell you that the tax is 25% withheld at source. You need to inform your RRSP manager that you are non-resident (which you should have doen 3 years ago).

There is no reduction available by treaty. however if the RRSP is you only source of income, you may have the tax reduced at filing time, by applying section 217.

You also need to account for reporting and perhaps paying tax in US (or whatever country you live in).

kastoori · Post by **kastoori** » Mon Dec 20, 2010 7:27 pm

Thanks for your reply Nelsona!
Yes, I am working in the US now. I had already informed the account manager that I am a non-resident. Although I am not sure if the bank requires anything in writing in that regards. She never advised me about that.

So when withdrawing the RRSP funds, do I need to inform/deal with the CRA in anyway, or it all goes through the bank. I did get a form from my account manager to request a release of the funds, but it had no option for consent for the 25% tax withholding.

Greatly appreciate your response.

Thanks!

tonyb99 · Post by **tonyb99** » Mon Dec 20, 2010 10:50 pm

Suggest moving the funds to a RRIF, you can then withdraw up to two times the annual minimum at a tax rate of 15%. (Assuming you are not in a hurry for the money)

nelsona · Post by **nelsona** » Tue Dec 21, 2010 11:56 am

tonys suggest is valid.

However the maximum eligible for those younger that retirement age is quite small, and the first year's withdrawl is still at 25%.

This might not outweigh the costs involved in switching.

And no, there is no option for you to ask the the bank to not withhold the 25%.