# Moving abroad: cashing out RRSPs - tax implications



## irish123 (Jul 29, 2015)

Hi all! New to this forum and hoping you guys can help me out! 

I'm an Irish citizen living in Ontario (Permanent Resident status). I have the option of having my year end bonus paid directly to RRSP pre-tax, however I'm concerned about the tax implications if I decide to move back to Ireland. I currently have a very small RRSP, the reason being my concern with taxation. 

The advice I have been given so far is that if I move home, I should leave the RRSP intact until the following tax year and then withdraw - as I would have no income in Canada (and would have to ensure I become non-resident for tax purposes), I would get taxed a 15% withholding tax as Canada and Ireland have a tax treaty. 

If correct, it seems like the obvious solution, as I would get pay 15% rather than my current 40% marginal tax rate if I take the bonus out with my paycheck, and also have the opportunity for growth on the full amount until I make the decision to move. But I feel like I'm missing something.....

Can anyone help me out with this?

Thanks!!


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## Eclectic12 (Oct 20, 2010)

As I understand it, the key is to cut ties to Canada and be sure to be declared a non-resident from an RRSP perspective.
http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html


Cutting ties to Canada may also mean certain property is deemed sold so you will want to plan ahead to pay what is owed but not accidentally pay more.
http://www.theglobeandmail.com/glob...the-departure-tax-when-going/article22032765/
http://www.agtax.ca/canada-usa-taxes/taxes-in-year-of-departure-from-canada/


The leaving RRSP intact sounds correct as a couple of web articles looking at Canadian going to the US has said that collapsing the RRSP while a Canadian tax resident generates a bigger Canadian tax bill. The RRSP left intact with a series of withdrawals for a Canadian non-resident means Canada withholds 25% but the Canada-US tax treaty reduces this to 15%.

You'll probably want to confirm that there is a Ireland - Canada to be sure that when moving back to Ireland, the 15% is accurate. Though if the refund is at 40%, then paying 25% withholding is still favourable.


Something else to check to have a complete picture is whether Ireland would tax RRSP withdrawal as well. 


Cheers


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