With an RRSP you deduct you contributions from your income and add your withdrawals to your income. Inside the RRSP, investments grow tax free and losses also occur tax free. This means that losses cannot be claimed.

The de-registration of your RRSP would mean the value of your RRSP would be added to your income for the year.

As an example: Assume you have employment income of $40,000 and an RRSP worth $50,000.

The basic income tax on your employment income would be roughly $7,000.

If you de-register your RRSP, the full value of $50,000 is added to your income, increasing your taxable income from $40,000 to $50,000. You would have to pay an additional $17,700 of income tax.

Now your bank will only withhold 25% of the RRSP withdrawal or $6,250, so when you file your taxes you will have to actually pay $11,450.

I would like to pay off debt and would like to de-register my RRSP’s which have a loss of approximately 50%. Can I apply for a Capital Loss Credit on my next income tax.

Thank-you

Robin St Denis