Section 217

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barb1948
Posts: 6
Joined: Fri Jul 01, 2005 9:19 am

Section 217

Post by barb1948 »

Under what circumstances can Section 217 be used? See copy of previous email..

U.S Citizen living in Canada for 3 years.
placed $$ in RRSP for the Fisrt Time Home Buyers plan.
Decided to move back to US, and want to know options of taking the $$ out of RRSP.
WAs told there will be 25% tax.

But I do see some posts about Section 217... When and how can this be appied? It seems you can withdraw small amounts ($5, 000?) per year at a 10% tax.... I will say I am learning alot with all the RRSp posts betwenn Nelson and Mark. Wow!

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from Nelson:

But putting in $50,000 in an RRSP they got well over $18,000 in tax savings, so they are coming out ahead by far in this situation. They stumbled into a good way to make money. Don't let their whining con you into giving them more money.

As to their US tax situation, yes they should have filed every year and should be going back to the years they didn't file. They can avail themselves of Foreign Earned income exclusions (form 2555) and/or foreign tax credit (form 1116) to reduce their US tax liability to pretty much ZERO. I would fx all this before filing the 2005 tax return next April.


nelsona non grata... and non pro

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Edited by - nelsona on Jul 01 2005 16:01:28 [/i] [/black]
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

The CRA guide on 217 is quite goood.

Basically, it involves 'pension' type money from canada, including RRSP.

The catch is that while 217-qualifying income may be less that the personal amount, 217 requires that one calculate tax based on WORLD income (all of it) in determining the tax rtae on the Cdn-rpension income.

It doesn't work well in the year one leaves Canada since it includes pre-departure income, and it doesn't work at all in years when one makes other income over abour $25,000.

The ideal candidate for 217 is for a non-working spouse living outside Canada, with no income other than RRSP/RRIF withdrawal.

My spouse has used it for the past 4 years to withdraw the minimum (and more) using her personal ammount, medical expenses (including my work premiums) and Cdn charitable donations.

<i>nelsona non grata... and non pro</i>
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