# RRSP withdrawal, moving to Quebec



## on2qc (Jan 4, 2019)

I am an Ontarian right now, but I intend to have real estate and move to Quebec by the end of 2019 (real estate is reasonable in the Gatineau area, less so in Ontario). I also have roughly $7-8k that I am going to withdraw from an RRSP in the next few months (probably just after March 31st so I can get a bigger tax refund for this year).

Just a question, I will be withdrawing under the Ontario rules, and I will be an Ontario resident when I make the withdrawal. However, I will be filing taxes as a Quebecer in 2020 for the 2019 year.

How do the taxes work out in this situation? Do any of you here have any experience with this situation?


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## Jimmy (May 19, 2017)

You file based on where you were a resident at Dec 31 of the tax yr. So if you are in PQ on Dec 31, 2019 you will pay PQ taxes for your 2019 income.


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## on2qc (Jan 4, 2019)

Jimmy said:


> You file based on where you were a resident at Dec 31 of the tax yr. So if you are in PQ on Dec 31, 2019 you will pay PQ taxes for your 2019 income.


I suppose it shouldn't be a big hit then, nothing out of the norm from what I was already expecting. I did fine a neat tax calculator at simpletax: https://simpletax.ca/calculator

Quebec doesn't have nearly as high of a tax rate as advertised, its certainly more than Ontario, but if there are no other 'gotcha' fees, it sounds like I can handle it. I noticed they have a high withdrawal rate, however.


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## OnlyMyOpinion (Sep 1, 2013)

My condolences.


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## Numbersman61 (Jan 26, 2015)

on2qc said:


> I suppose it shouldn't be a big hit then, nothing out of the norm from what I was already expecting. I did fine a neat tax calculator at simpletax: https://simpletax.ca/calculator
> 
> Quebec doesn't have nearly as high of a tax rate as advertised, its certainly more than Ontario, but if there are no other 'gotcha' fees, it sounds like I can handle it. I noticed they have a high withdrawal rate, however.


An interesting situation for this taxpayer is that if the withdrawal is made while he is resident of Ontario, the total tax withheld would be reported as federal tax withheld on the T4A.
The taxpayer could conceivably have a Quebec tax liability and a federal refund when filing the income tax returns. I’m not certain if this is the case - perhaps someone with specific knowledge can comment. One alternative would be to make the withdrawal after becoming a Quebec resident so that the payor would be obliged to deduct Quebec tax.


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## bgc_fan (Apr 5, 2009)

Numbersman61 said:


> An interesting situation for this taxpayer is that if the withdrawal is made while he is resident of Ontario, the total tax withheld would be reported as federal tax withheld on the T4A.
> The taxpayer could conceivably have a Quebec tax liability and a federal refund when filing the income tax returns. I’m not certain if this is the case - perhaps someone with specific knowledge can comment. One alternative would be to make the withdrawal after becoming a Quebec resident so that the payor would be obliged to deduct Quebec tax.


That's not unusual. People moving to Quebec during in the year would have paid Federal taxes throughout, and nothing to Quebec. So they would be on the hook for the full year of Quebec tax, but could conceivably have a refund federally.


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## Onagoth (May 12, 2017)

on2qc said:


> I suppose it shouldn't be a big hit then, nothing out of the norm from what I was already expecting. I did fine a neat tax calculator at simpletax: https://simpletax.ca/calculator
> 
> Quebec doesn't have nearly as high of a tax rate as advertised, its certainly more than Ontario, but if there are no other 'gotcha' fees, it sounds like I can handle it. I noticed they have a high withdrawal rate, however.


Quebec has QPIP premiums and CNT/HSF contributions if I recall correctly


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## Spudd (Oct 11, 2011)

on2qc said:


> probably just after March 31st so I can get a bigger tax refund for this year


Just FYI, March 31 is not an important date for your RRSP withdrawal as far as I know. Taxes are done by calendar year, so if you withdraw in 2019, whether it is before or after March 31, it will count as 2019 income. The only thing March 31 is useful for is that for contributions to your RRSP between Jan 1 - Mar 1 (I believe it's just the 1st, not the 31st), you can pick whether these contributions count as 2018 or 2019 contributions.


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## Eclectic12 (Oct 20, 2010)

Spudd said:


> on2qc said:
> 
> 
> > ... I am going to withdraw from an RRSP in the next few months (probably just after March 31st so I can get a bigger tax refund for this year) ...
> ...


Agreed.


Maybe it is language but the RRSP withdrawal is going to add income and likely taxes. AFAICT, the only potential tax improvement that could be triggered by an RRSP withdrawals is to have a lower tax rate applied the income that has to be recorded.


Cheers


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## on2qc (Jan 4, 2019)

bgc_fan said:


> That's not unusual. People moving to Quebec during in the year would have paid Federal taxes throughout, and nothing to Quebec. So they would be on the hook for the full year of Quebec tax, but could conceivably have a refund federally.


This is an interesting situation I haven't thought about. I suppose at the end of the day it balances out.


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## on2qc (Jan 4, 2019)

Spudd said:


> Just FYI, March 31 is not an important date for your RRSP withdrawal as far as I know. Taxes are done by calendar year, so if you withdraw in 2019, whether it is before or after March 31, it will count as 2019 income. The only thing March 31 is useful for is that for contributions to your RRSP between Jan 1 - Mar 1 (I believe it's just the 1st, not the 31st), you can pick whether these contributions count as 2018 or 2019 contributions.


That makes it easy, my intent is to switch all my RRSP over to a TFSA. I don't feel like dealing with RRSP tax implications and withdrawal rates going forward. Just a preference, and I have the room to transfer it over.


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## Eclectic12 (Oct 20, 2010)

As long as you are aware that the RRSP withdrawal is going to increase your income by $7K to $8K and have planned for it ... it's all good.

If not, you may end up paying more taxes than you could plan to pay.


Cheers


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## on2qc (Jan 4, 2019)

Eclectic12 said:


> As long as you are aware that the RRSP withdrawal is going to increase your income by $7K to $8K and have planned for it ... it's all good.
> 
> If not, you may end up paying more taxes than you could plan to pay.
> 
> ...


The good news is that I'm not looking to spend the money, just transfer it to TFSA 100%. If I ran into troubles, I could pull money out of the TFSA so long as I don't lock it into a long GIC. The federal side does take the 10% withdrawal, and per the tax calculator I looked at taxes in Quebec aren't nearly as high as I was thinking some years ago before I considered real estate there. I have lived in Quebec years ago, but I forgot what my taxes were, plus that was a different time and I'm making lots more income now.

rant start:

On the plus side, I am going to be saving hundreds of thousands of dollars in real estate vs buying here in Ontario. I couldn't even buy if I stayed here, that's how bad it is in Ontario for housing prices. I am purchasing a newly built home, garage and completely updated in the $250k range. Where I currently live in Ontario it would be in the 750-850k range for the same amount of house, all the homes here are used as well (newer costs more) and a long commute from the office. I'm exhausted. Lucky my workplace has a building in Ottawa I can transfer to, and I've made the choice.

Luckily, I have conversational french down. I can order in restaurants, I can discuss weather with neighbors, and I'm completely comfortable with life in Quebec, I've lived there before. I'm not exactly 100% fluent (conversational only gets you so far), but all the government forms I ever needed in the past were provided in English and I never had a problem. Separatism has died down, being anglo in Quebec isn't like it was in the 80's-early 90's anymore.

But this is another topic for another day, real estate is insane these days in the hot markets! I'm leaving greater Toronto for good thanks to the job transfer in Ottawa. Even Ottawa has higher housing prices then over the river, which shocked me. So I'm buying in Gatineau region and saving a bundle. 2019 is my year of major change.

Vive le Quebec! I wouldn't be a homeowner without moving, that's how bad the major markets are in Ontario now. Its supply and demand, Toronto is too popular for its own good. I'm not getting a $600k loan for a 2 bedroom condo that has no room for a proper sized dining table. And I'm tired of renting. There's little quality of life in Toronto these days. Who are these people shelling out $600 or 700k for a condo, and $800-1 million for an average house? The market is insane! If banks wouldn't lend the mortgages, it wouldn't be this crazy of a market. Buyers technically should know better, but hey, if a bank gives you the mortgage, why not spend 60-80% of your income on housing? Sounds cool apparently, but not my thing. I'm leaving.

Basically in Toronto, you have two income couples making an average of $50-60k spending 60-80% of their incomes on housing. That's what is keeping this market alive. If a couple makes $110k combined and spends 60% on housing, that's $66,000 a year spent on housing, or $5,500 a month for mortgage, insurance, taxes (using an average sized house at $850,000 mortgage and, say, 3-4% interest). That's what it takes to just survive in Toronto. My family has opted to rent to avoid this mistake of over-spending on housing, but I'd like to get out of an apartment and into a house with a garage. I want to live, not merely survive. I have no choice but to leave.

rant over!


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## OnlyMyOpinion (Sep 1, 2013)

on2qc said:


> ... The market is insane! If banks wouldn't lend the mortgages, it wouldn't be this crazy of a market. Buyers technically should know better, but hey, if a bank gives you the mortgage, why not spend 60-80% of your income on housing? Sounds cool apparently, but not my thing. I'm leaving.
> Basically in Toronto, you have two income couples making an average of $50-60k spending 60-80% of their incomes on housing. That's what is keeping this market alive. If a couple makes $110k combined and spends 60% on housing, that's $66,000 a year spent on housing, or $5,500 a month...


Which banks are issuing mortgages based on ratios that high?


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## Eclectic12 (Oct 20, 2010)

on2qc said:


> The good news is that I'm not looking to spend the money, just transfer it to TFSA 100%. If I ran into troubles, I could pull money out of the TFSA so long as I don't lock it into a long GIC. The federal side does take the 10% withdrawal, ... I'm making lots more income now.


I suspect keeping some of the funds in the TFSA liquid for the tax bill may be important. At 10% withholding tax, it seems to only cover the +10% Quebec tax rates. 

Ontario and Quebec tax personal marginal income tax rates.
https://www.taxtips.ca/taxrates/on.htm
https://www.taxtips.ca/taxrates/qc.htm


An Ottawa office is mentioned in the rant as well as more income, I suspect that there will be a base level set so that MITR the RRSP withdrawal will be associated with will be at least 20% or higher.

Others have posted here on CMF that for RRSP withdrawals some financial institutions (FIs) will let one make two RRSP withdrawals at less than $5K so that the full $8K will have 10% withholding tax taken. Other FIs apply 10$ to the first $5K then the $5001 to the $7 or $8K would have the higher 20% withholding tax applied. More withholding tax looks like it will reduce the amount owing but but it sounds like without other actions, the withholding tax will be no where near enough.


I can't help wondering that since the Quebec rates will be applied to the RRSP withdrawal, whether it still makes sense to make the withdrawal. Is retirement income going to be high enough to make it worth paying the tax now, forgoing any tax bracket indexing/tax deferred growth?




on2qc said:


> ... Separatism has died down, being anglo in Quebec isn't like it was in the 80's-early 90's anymore ... Even Ottawa has higher housing prices then over the river, which shocked me. So I'm buying in Gatineau region and saving a bundle ...


YMMV ... I'll have to check with my friend who moved from Montreal to Gatineau. I believe it only a short while ago he was surprised to have a store clerk he had been speaking to in French berate him for speaking English to his wife. The clerk was insisting his wife should be forced to learn/speak French.


As for the Ottawa / Gatineau price differential, he says he got the best of both worlds. Working in Ottawa gives him a larger salary than when he was working in Montreal while living in Gatineau gives a house a lower cost. His only complaint is that his Ontario employer withholds taxes on his employment income at Ontario rates so he has to save up during the year the extra taxes he owes to Quebec.




on2qc said:


> ... I want to live, not merely survive. I have no choice but to leave.


Pretty much the same reasons that I lived in Kitchener-Waterloo but was based out of an office in Toronto when I was a consultant. 


Cheers


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## on2qc (Jan 4, 2019)

Eclectic12 said:


> YMMV ... I'll have to check with my friend who moved from Montreal to Gatineau. I believe it only a short while ago he was surprised to have a store clerk he had been speaking to in French berate him for speaking English to his wife. The clerk was insisting his wife should be forced to learn/speak French.


I have no doubt this has occurred, but it is important to keep perspective. Is one ignorant buffoon worth getting upset over? Probably not. I lived in Quebec many moons ago, different era of my life, and I didn't find it that challenging. Anglos can live there, even without conversational french like I do. Keep in mind, a good 20-30% of the Quebec population is either anglo first, or they are allophones who use english at home. That's not a tiny minority, its a huge part of the province. The distribution isn't uniform, but I will have zero problems in Gatineau.

The only real, tangible problem I've heard multiple reports about in Gatineau that is an negative is the health care, apparently Quebec offers pretty poor hospital services there. And Quebec's health plan doesn't really get accepted in Ottawa where the good hospitals are (well, you can go to an Ottawa ER, but I mean for actual procedures and ongoing care), so if anything health-wise came up, I'd probably be forced to drive to Montreal for good medical care. But again, its only 2 hrs to world class services in Montreal. Hardly that much of a drawback IMO.

And I can think of a few responses en francais to answer idiot clerks. 

The truth is, it isn't just housing. Cellular plans are cheaper in Quebec. Hydro rates are a fraction in Quebec (cheapest rates in North America, I can heat my home with hydro for example). Car insurance is a fraction of what Ontario rates are (I've already called and got a quote, I can pay $67/month in Quebec vs $140/month here in Ontario).

Ontarians are paying way too much for virtually everything. It adds up. Quebec is a bargain province. Taxes notwithstanding.


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## Eclectic12 (Oct 20, 2010)

As long as you know that it can happen.

BTW ... with the RRSP withdrawal being taxed in Quebec, have you decided whether it still makes sense to do the RRSP withdrawal then report income?


Cheers


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## on2qc (Jan 4, 2019)

Eclectic12 said:


> As long as you know that it can happen.
> 
> BTW ... with the RRSP withdrawal being taxed in Quebec, have you decided whether it still makes sense to do the RRSP withdrawal then report income?
> 
> ...


On the first point, I've had it happen before multiple times. Remember, I have lived in Quebec before. The few people who will make snide remarks are no different than someone from the west who says easterners are all a bunch of idiots who should slide into the ocean (I've heard that one before as well, to my face). Just because its in English doesn't make it less ignorant.

Beyond people and their short tongues, separatism has never been lower in modern history. At least since the Levesque generation has been around, their power is waning every day. Younger Quebecois largely don't have the same stigma their parents had so far as I can tell. I'm of an older generation now, but when you talk to someone in their 20's or 30's, they just don't sound like a Quebecois in their 50's or 60's. Times have genuinely changed. But separatism is different from people who make ignorant comments at the checkout line. That's never going to change.

With regards to the RRSP, since there's reportedly no other "gotcha" fees, I think I will. I already have most of my savings investments in TFSA, I have a smaller amount in RRSP's. I've already performed this step before, what I typically do is take my RRSP from my employer account and transfer it over to my personal TFSA every few years. I just didn't know how it would be introducing tax laws in Quebec into the mix.

If its just the usual tax rate, then I think I'll be fine. CRA will take the 10% withdrawal, and I'll probably owe another amount after all is said and done, but it doesn't look like a huge hit. I'm fond of TFSA's, I simply like them better. I don't want tax gotcha's later in life.


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## Eclectic12 (Oct 20, 2010)

AFAICT, the difference is that the RRSP withdrawal will be hit with the Ontario (or more accurately, the non-Quebec) withholding rate. When the tax return is filed in early 2019 with a Dec 2018 residency in Quebec, the Quebec rates will be what the true up will occur against. Comparing the Ontario and Quebec provincial rates, it looks like +10%.

Going forward, it reads that a lower federal withholding rate will be applied to RRSP withdrawals while a Quebec withholding rate will also be applied (which looks like a flat 15% but I haven't dug into the details).


As for avoiding tax gotcha's later in life ... YMMV. In my case, the withdrawal is going to be at a much lower rate so I like being able to use the tax money now, through deferral.


Cheers


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## on2qc (Jan 4, 2019)

Eclectic12 said:


> AFAICT, the difference is that the RRSP withdrawal will be hit with the Ontario (or more accurately, the non-Quebec) withholding rate. When the tax return is filed in early 2019 with a Dec 2018 residency in Quebec, the Quebec rates will be what the true up will occur against. Comparing the Ontario and Quebec provincial rates, it looks like +10%.
> 
> Going forward, it reads that a lower federal withholding rate will be applied to RRSP withdrawals while a Quebec withholding rate will also be applied (which looks like a flat 15% but I haven't dug into the details).
> 
> ...


Isn't that just the withholding rate? The actual tax rate doesn't appear to be radically different. It is my understanding that a withholding tax is just withholding, it isn't the final rate you pay.


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## Eclectic12 (Oct 20, 2010)

I guess the "When the tax return is filed in early 2019 with a Dec 2018 residency in Quebec, the Quebec rates will be *what the true up will occur against*" is to much of a short form that is not clear enough.

The "true up" is a short form that is meant to express that the withholding tax will reduce the final tax bill. Too much = refund and too little = tax bill. 

For the "looks like +10%" comment, I was assuming the Federal rates would be the same so that the provincial rates would give the spread on their own. The lowest Quebec tax rate is 15% while Ontario is 5.05% giving a differential of +9.95%. When looking at the lowest level of the combined provincial & Federal rates, the differential is 27.53% - 20.05% which is a +7.48% (maybe because of the Ontario surtax?).



Cheers


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## on2qc (Jan 4, 2019)

I find it easier to use a tax calculator. I hope this is accurate.

https://simpletax.ca/calculator

Using the above reference, here is how I did the math.

Let's say base income is $50,000. In Quebec, the total tax (including CPP/EI revenues) is $13,308 per the calculator. If I withdraw $7,000 of RRSP funds, that would make my income $57,000, which makes total taxes $16,209 (difference of +$2,901).

If 10% is already being withheld (at minimum) that means $700 is already paid (or would be refunded by CRA to submit to Revenu Quebec). This means I will need to ensure I have roughly $2,200 available come tax time next year, which leaves my after-tax withdrawal at about $4,000 to place in a TFSA.

The only thing I'm not clear about is if EI and CPP taxes (payroll taxes) are applied to RRSP withdrawal income? If not, that could be reduced off that amount. I can never seem to remember if EI and CPP taxes apply to RRSP withdrawals.


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## ian (Jun 18, 2016)

This is not an issue. No real difference than moving to any other province. You pay based upon where you claim your residence is as at 31/12. 

You need to look at the tax data to see how the changes in residence impact you and then decide. We moved from BC to Alberta 18 years ago. It was very much in our favour to be officially resident in Alberta at J1 because there was a 10 point difference in the incremental tax rate for me between those two provinces. It all depends on the various Provincial tax scales, their tax credits, and how they handle medicare premiums. Certainly when I moved for Quebec to Ontario there was no visible impact on my CPP. It was seamless.


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## Eclectic12 (Oct 20, 2010)

on2qc said:


> I find it easier to use a tax calculator. I hope this is accurate ... If 10% is already being withheld (at minimum) that means $700 is already paid (or would be refunded by CRA to submit to Revenu Quebec). This means I will need to ensure I have roughly $2,200 available come tax time next year, which leaves my after-tax withdrawal at about $4,000 to place in a TFSA ...


Sounds about right ... though I'd be tempted to use a tax program to get closer numbers.

As for putting $4K into the TFSA ... if you have the room, why wouldn't you max out the TFSA and just keep what you think you will need for the taxes in a liquid for (ex. deposit savings account if bank or HISA MF if at a discount broker)? If current cash flow covers the tax then you can move the funds into something more permanent and if not, you can withdraw what you need.




on2qc said:


> ... The only thing I'm not clear about is if EI and CPP taxes (payroll taxes) are applied to RRSP withdrawal income? If not, that could be reduced off that amount. I can never seem to remember if EI and CPP taxes apply to RRSP withdrawals.


RRSP withdrawals only have withholding tax applied to them while employment taxes have EI and CPP applied to a maximum. 

I suspect the RRSP withdrawal income is better reported in the calculator as "Other Income". I have not checked but suspect this is for things like interest ... which I suspect is more accurate.




ian said:


> ... You need to look at the tax data to see how the changes in residence impact you and then decide ...


??? ... the move is from Ontario to Quebec where the Quebec rates seem to be about 10% higher. The Ontario surtaxes, when looking at the "Feds plus Province" MITRs seems to reduce from 10%.




ian said:


> ... Certainly when I moved for Quebec to Ontario there was no visible impact on my CPP. It was seamless.


The discussion of provincial tax rates are because the OP plans to make an RRSP withdrawal while in Ontario then have the Dec residency set the tax rates that the withholding tax will be adjusting be the Quebec ones. 

CPP is only mentioned as the OP for some reason thought that EI and CPP might be applied to the RRSP withdrawal (which I don't believe is true).


Cheers


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## on2qc (Jan 4, 2019)

Thanks for the additional info, yes I intend on keeping the remainder in a savings type account and liquid for payment of any tax.

Speaking of which, there is one factor I didn't consider. It has been a few years since I've done this, but I don't remember how EI and CPP factor in. When you withdraw RRSP, do you have to pay the EI and CPP payroll taxes or just the income tax? I don't remember paying enough attention the last time I did this, nor do I remember how that hashed out.

If you are withdrawing RRSP, not earning income from employment, would that escape the payroll taxes? This isn't a payroll payout, afterall.


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## OnlyMyOpinion (Sep 1, 2013)

Correct.


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## on2qc (Jan 4, 2019)

OnlyMyOpinion said:


> Correct.


Correct being that its only income tax paid, and no EI/CPP?


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## OnlyMyOpinion (Sep 1, 2013)

That's right.


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## on2qc (Jan 4, 2019)

OnlyMyOpinion said:


> That's right.


You just made me smile.


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