# Transfer of foreign pension to my RRSP?



## lagagnon (Apr 13, 2017)

I worked and lived in Australia for 11 years and have a pension fund there (the Aussies call it superannuation), which I want to transfer over as a lump sum and into my RRSP here in 3 years (I am retired and 62 years of age).

I am reading a National Post article on this topic. It states: “In order to take full advantage of the strategy, you want to make an RRSP contribution that is equal to the amount of the gross withdrawal from the plan,” says Ms. Marshall. “So, if you made a withdrawal of $100,000 from your foreign plan and they withheld 30% that means you will receive a cheque for $70,000. On your Canadian income tax return, include the gross amount of $100,000 and make an equal offsetting RRSP contribution. Your RRSP deduction will fully offset that income inclusion.”

Has anyone here done anything similar with a foreign plan and how did the process go. What documentation does the bank need to show that those funds can actually be placed in an RRSP? What sort of other documentation will the tax office require?

Any assistance appreciated.


----------



## AltaRed (Jun 8, 2009)

It is my understanding that you cannot do as you suggest. I am guessing the NP article (not having read it or have access to it) simply assumes that you would have $100k of RRSP contribution room available to make a $100k contribution.


----------



## Eclectic12 (Oct 20, 2010)

lagagnon said:


> ... I am reading a National Post article on this topic.


Is a link available to the full text of the article?

Otherwise any assumptions or special considerations are being guessed at.


lagagnon said:


> ... What documentation does the bank need to show that those funds can actually be placed in an RRSP? What sort of other documentation will the tax office require?


The first question is whether you have RRSP contribution room that covers the gross amount of the withdrawal?
I am not aware of any rollover provisions that would remove the need for RRSP contribution room but maybe the article is outlining one that exists.

If not - then the max RRSP contribution will be whatever you have room for plus any additional contribution granted leading up to the superannuation withdrawal. Over-contributing to one's RRSP by over $2K means a 1% penalty per month until it is fixed.


Keep in mind that unlike the TFSA, the way one gets RRSP contribution room is to have "earned income". Make $10K from dividends - no RRSP contribution room will be granted as it is investment income, not earned income. Make $10K in employment income, then it is roughly 18% x earned income (you are retired so some of the other factors won't come into play).http://www.moneysense.ca/save/investing/rrsp/rrsp-contribution-limit/


It is up to you to make sure you don't over-contribute so assuming you just filed a 2016 tax return, you should have as part of the notice of assessment (NOA) the "2017 RRSP Deduction Limit" on line A. If you have contributions made in a prior year that has not been deducted, this may be higher than the available contribution room, so make sure you check out the actual RRSP contribution room by looking at the last line.

If you expand the image from this link, you will see that the "Deduction Limit" line A is $15K, the "unused contributions reported in a previous year" line B is $1.5K and the last line, RRSP contribution room is $13.5K (i.e. $15K - $1.5K). 
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/cntrbtng/lmts-eng.html

If it turns out that there is enough RRSP contribution room - you need to open an RRSP, make the contribution of whatever amount. The financial institution will give a receipt that you will enter into your Canadian tax return for the year the contribution was made.


On thing to thing about though ... if you are retired with a low income, maybe a smaller number into the RRSP and the remainder into a TFSA to be Canadian tax free may make more sense.


Cheers


----------



## mordko (Jan 23, 2016)

Canada and Britain have an agreement so that one can transfer British pensions into an RRSP-like arrangement in Canada. Britain requires for the destination to be a "Qualifying Recognised Overseas Pension Scheme (QROPS)". 

Could the same or similar arrangement be in place between Canada and Australia?


----------



## Eclectic12 (Oct 20, 2010)

This article seems to say that the requirements matter more than whether there is an agreement or arrangement in place. It also says that where the requirements are met, RRSP contribution room is not needed to make the RRSP contribution.
http://www.advisor.ca/retirement/retirement-news/how-to-bring-global-pensions-home-231756

This covers the Canadian requirements so likely the other half of the question is what requirements/agreements are on the Australian side.

Cheers


----------



## twa2w (Mar 5, 2016)

lagagnon said:


> I worked and lived in Australia for 11 years and have a pension fund there (the Aussies call it superannuation), which I want to transfer over as a lump sum and into my RRSP here in 3 years (I am retired and 62 years of age).
> 
> I am reading a National Post article on this topic. It states: “In order to take full advantage of the strategy, you want to make an RRSP contribution that is equal to the amount of the gross withdrawal from the plan,” says Ms. Marshall. “So, if you made a withdrawal of $100,000 from your foreign plan and they withheld 30% that means you will receive a cheque for $70,000. On your Canadian income tax return, include the gross amount of $100,000 and make an equal offsetting RRSP contribution. Your RRSP deduction will fully offset that income inclusion.”
> 
> ...



Yes you may be able to bring your superannuation or pension back to Canada if it is a private superannuation pension.

It has been a while since I have done this and only with UK and USA.

Section 60 (j) of income tax act outlines how to move a pension from a foreign source to an RSP without using contribution room.
The requirements are more specific in 60 (j)(i)
Contributions to the foreign plan must have been made by the employer for services rendered.
Purpose of accumulated contributions was to be used to provide an annuity or periodic payment to the employee after their retirement
In order to transfer to an RSP the benefit from the foreign plan must be paid out in a lump sum. So you must confirm the plan will pay out the commuted value.
The foreign pension benefit must be attributed to employment service while employee was a non-resident of Canada.
The pension benefit is included in income for the year and cannot be exempt from tax in Canada due to a tax treaty.

So basically if you have accumulated an employer paid pension or superannuation while a non resident, it can be rolled over to your RSP providing the pension will pay it out to you as a lump sum which can then be contributed to your RSP. So the other country must have rules in place that allow you to withdraw the lump sum (usually with withholding tax) and move it to Canada. If the foreign pension is tax exempt you are out of luck.

Generally the process is as follows.
Find out if any requirements from the foreign plan re type of plan to transfer it to and confirm you can withdraw a lump sum. You may need a letter of confirmation from your RSP provider in Canada confirming the plan meets the requirements. I know the UK for example is strict on this and only certain plans meet the requirements. RBC and RBC DI RSPs did not qualify but RSC DS plans did
Once that is confirmed and OK
1 - get the lump sum from the foreign pension and pay any taxes and penalties(usually withheld at source) Some foreign plans will sent the cheque directly to the RSP provider and not withhold any tax.-I have only seen this once
2 - Deposit in Canadian Dollars to your RSP. You may want to borrow the amount of the taxes that were withheld to make the taxes work more equitably. You do not have to deposit the full amount of the gross withdrawal and it may make sense to play with the numbers to ensure you recover the most foreign tax withheld form the transfer.
3 - Include the lump sum amount as income line 115 in Cdn dollars on your T1 tax return
4 - Include the RSP deposit in Cdn Dollars on line 208 on T1 and complete and submit schedule 7
5 - Report the value of any withholding tax paid at source (foreign pension) in Canadian Dollars on line 405 on T1 general.

Hope this helps. I have never dealt with an Aussie one nor do I know anyone that has. Had colleagues do this for Switzerland, Hong Kong and the Philipines as well as USA and UK so it is certainly doable.

Cheers
J


----------



## Kher-Spade (Oct 6, 2016)

mordko said:


> Canada and Britain have an agreement so that one can transfer British pensions into an RRSP-like arrangement in Canada. Britain requires for the destination to be a "Qualifying Recognised Overseas Pension Scheme (QROPS)".


That agreement still exists but unfortunately the UK govt kicked out all Canadian QROPS providers from their approved list back in February this year. So even though the agreement still exists, providers who would accept QROPS from the UK don't.


----------



## mordko (Jan 23, 2016)

Kher-Spade said:


> That agreement still exists but unfortunately the UK govt kicked out all Canadian QROPS providers from their approved list back in February this year. So even though the agreement still exists, providers who would accept QROPS from the UK don't.


You are right. It goes "B - Barbados, Bulgaria, Belgium". "C - no entries". 

What???

"https://www.gov.uk/government/publications/list-of-qualifying-recognised-overseas-pension-schemes-qrops/list-of-recognised-overseas-pension-schemes-notifications


----------



## lagagnon (Apr 13, 2017)

Thank you all above for your wonderful contributions. I will take all on board when I do my transfer over in 3 years or so and will re-confirm the procedure with the CRA before I do so.

Larry


----------

