# Withdrawing from RRSP if leaving Canada



## dalton (Aug 30, 2015)

I am both a Canadian and Irish passport holder living in BC. Currently I have only been investing in TFSAs (for about 6 years). My salary has been rising and I will probable max it out this year, I just gone from $70k to $80k. 

The next logical step is to invest in an RRSPs (perhaps I should be already...). I have been holding off on a RRSP as I don't know if I will be retiring in Canada. There is a chance I will return to Ireland (or perhaps the UK) at some stage.

I don't know under what circumstances that will be, it could be in an emergency family situation or a planned timed move. I don't even know what the odds of it are.

What I am trying to understand is what options would I have and what are the tax implications. For example could I redraw it over a few years under my personal amount and pay no tax as I wouldn't be earning in Canada?

Do I then pay tax on my withdrawal as if it were income in Ireland?

Could I leave it there until retirement?


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## Moneytoo (Mar 26, 2014)

Here're some answers (open the link twice if it asks you to enter email to read the full article): http://www.fool.ca/2015/08/28/2-things-you-should-know-about-rrsps-rrifs-and-withdrawals/


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## Guban (Jul 5, 2011)

I am not familiar with the Irish specifics. You'd have to check the Canada-Ireland tax treaty, but in general...

You can own an RRSP as a non resident of Canada.
If you take money out as a non resident, you have to pay 25% withholding tax. This may be recoverable, in part, or in whole, by filing a Canadian income tax return.
This withdraw most likely will be taxed in your new country if residence, but the taxes paid to Canada should qualify as a Foreign Tax Credit. If the 25% tax is not enough, then you may owe taxes to your new country.
If you convert the RRSP to a RRIF, the withholding rate may be lower than 25%.


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## dalton (Aug 30, 2015)

Guban said:


> I am not familiar with the Irish specifics. You'd have to check the Canada-Ireland tax treaty, but in general...
> 
> You can own an RRSP as a non resident of Canada.
> If you take money out as a non resident, you have to pay 25% withholding tax. This may be recoverable, in part, or in whole, by filing a Canadian income tax return.
> ...


Thanks

A couple of more questions:

When I do my Canadian taxes the year after taking the money out will I be declaring worldwide income and being taxed on it? Surly if I am already being taxed in Ireland that wouldn't be fair?

As for the withdrawal being taxed in Ireland, that is my concern. That basically using an RRFSP will cost me money!

I think I need to talk to an expert on this? Any suggestions on what I should be looking for. I need someone who can read the Canada-Ireland tax treaty and provide me options / scenarios.


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## heyjude (May 16, 2009)

dalton said:


> Thanks
> 
> A couple of more questions:
> 
> ...


Before paying an expert, I would suggest carefully reading it yourself. 

http://www.revenue.ie/en/practitioner/law/double/canada.html


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## Guban (Jul 5, 2011)

As I wrote, I don't know about Ireland, so you should have a look at the link that heyjude gave you, but generally ...

As a non resident, you'd file an elective 217 return. In it, you'd declare all your income so that Canada can see how much Canadian sourced income you have. If it is basically all, you'd be allowed to claim personal credits, that can eliminate or reduce your final tax bill to Canada. You don't pay Canadian taxes on your Irish income.

See:
http://www.cra-arc.gc.ca/E/pub/tg/t4145/README.html


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## dalton (Aug 30, 2015)

heyjude said:


> Before paying an expert, I would suggest carefully reading it yourself.
> 
> http://www.revenue.ie/en/practitioner/law/double/canada.html


Thank you, however that may be beyond me!


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## Eclectic12 (Oct 20, 2010)

dalton said:


> When I do my Canadian taxes the year after taking the money out will I be declaring worldwide income and being taxed on it? Surly if I am already being taxed in Ireland that wouldn't be fair?
> 
> As for the withdrawal being taxed in Ireland, that is my concern. That basically using an RRFSP will cost me money!


Assuming you leave Canada properly so that you are a non-resident on the date you leave, as I understand it:


> *What income do you have to report?*
> 
> *Part of the tax year that you WERE a resident of Canada*
> Report your world income (income from all sources, both inside and outside Canada) on your Canadian tax return.
> ...


http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/lvng-eng.html

So as long as the RRSP withdrawals are after the date of leaving Canada, you'd be paying the non-resident rate of 25% (which could be reduced by a tax treaty with Ireland).
http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/nnrs-eng.html


Tax Tips web site lists employment income in BC that anything above $44,701 is going to be taxed more than 25% so likely using an RRSP, whether one stays or goes will work in one's favour. Just don't drive the income below $44,701 with one's RRSP contributions.
http://www.taxtips.ca/taxrates/bc.htm



The other factor to consider that I've rad about is the departure tax:


> When you leave Canada, you are considered to have disposed of certain types of property at their fair market value and to have immediately reacquired them for the same amount. This is called a deemed disposition, and you may have to report a capital gain.


(This is from the first CRA link.)

So you'd want to have this worked out before leaving to make sure you pay what is owed and no more.




dalton said:


> I think I need to talk to an expert on this?


I'd want to as while people here are good about replying - an expert can hopefully make sure some of the more subtle parts or misunderstandings are taken care of.


Cheers


*PS*

Once the transition year is up, one would be subject to only that NR WithHolding tax. 

As Guban says, one would then choose whether to file the elective 217 return to potentially pay less taxes.


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## argyll (May 6, 2012)

Hello, I thought I'd piggy back on this thread rather than start a new one as it relates somewhat to my situation.

I left Canada in March 2014 and have my letter from CRA deeming me a non-resident from that time. As a non-resident I can withdraw locked-in investments and pay the 25% withholding tax. All of this is straightforward. My question revolves around how much I can unlock. Government forms and info say that ALL the money is 'the account' must be withdrawn therefore not allowing a partial withdrawal however I have 4 locked-in accounts of varying amounts. For tax reasons I would like to withdraw the money from each of those accounts in separate tax years but TD 'thinks' that I have to close all my accounts at the same time. Does anyone have any info in regards to this ? All suggestions gratefully received.


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## peter344343 (Mar 10, 2016)

dalton said:


> I am both a Canadian and Irish passport holder living in BC. Currently I have only been investing in TFSAs (for about 6 years). My salary has been rising and I will probable max it out this year, I just gone from $70k to $80k.
> 
> The next logical step is to invest in an RRSPs (perhaps I should be already...). I have been holding off on a RRSP as I don't know if I will be retiring in Canada. There is a chance I will return to Ireland (or perhaps the UK) at some stage.
> 
> ...


If you convert the RRSP to an RRIF the withholding tax is 15% with Ireland, less than if you had withdrawn the money in Canada as a retiree!
The only catch is you must convert the RRSP to RRIF and there is a minimum age restriction I believe.
If you plan to take out your money early or not convert it into an annuity type income stream, then it is better not to use this vehicle if you will leave Canada.


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