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Tax Rate on RRSP Withdrawal

| January 7, 2020

In the case of withdrawing money from Registered Retirement Savings Plan (RRSP) before retirement a withholding tax is charged at source by the financial institution.

Following are the withholding tax rates for the resident of Canada;

Withdrawal AmountWithholding Federal Tax
Up to $5,00010% (For Quebec – 5%)
Between $5,000 and $15,00020% (For Quebec – 10%)
Greater than $15,000 30% (For Quebec – 15%)

In the case of a non-resident of Canada, generally, the withholding tax rate is 25%. It may be reduced if there is a tax treaty between Canada and the other country.

In the year of filing tax return:

Please note that the amount withdrawn will be included in your taxable income in that year. The actual tax on the RRSP withdrawn will be calculated at the time of filing personal tax return and will be adjusted with the withholding tax paid.

(This posting is for personal educational purposes only.  Please consult your tax advisor for your specific situation.)