RRSP’s, Investments and Leaving Canada

by Tax Guy - Burlington Accountant on March 6, 2009 Print This Post Print This Post

Question: I have some questions about RRSPs and leaving Canada. From your article – RRSP’s & Moving To The U.S. You mention that it might make sense to leave your investments inside your retirement account when you leave Canada and avoid the withholding tax and the U.S. tax on the withdrawal.

My case, I have invested in stocks in my RRSP account. If I moved to Europe or the Middle East, I want to keep my RRSP as long as I can but not more than 20 years. Can you please advise me on the following questions?

  • If I lose my permanent residence status because I am out of Canada, is it possible to keep my RRSP?
  • If I withdraw less than $5,000 each year how much tax will I pay and should I file a tax return?
  • Do I need to worry of anything else like losing my investments?
  • Will the bank refuse to send me my money if I leave?

Who Can Contribute to an RRSP?

Anyone who has earned income while resident in Canada, or who has employment income from working in Canada can contribute to an RRSP.

Ceasing To Be A Resident & Your RRSP

If you leave Canada but leave your RRSP in Canada, your stocks and other investments will continue to grow tax free until you turn age 71. At age 71, your RRSP must be converted into a registered retirement income fund (RRIF), and annual withdrawals must be taken fro the account.

When you stop being a Canadian resdient, any withdrawals from your RRSP or RRIF are subject to Canadian non-resident withholding tax at 25%. The withholding tax may be reduced if a treaty exists between your new country and Canada. My previous article indicated that the withholding tax was 15%. This rate is the rate between Canada and the U.S.

The withholding tax rates on withdrawals from retirement accounts is the subject of tax treaties. These rates apply to regular pension withdrawals when you are over age 65 and drawing retirement income. Otherwise the withholding is 25%. In either case, you do not need to file a Canadian tax return as long as you are not a resident of Canada.

Other Considerations

If you hold stocks, bonds or mutual funds in your RRSP and you are no longer a resident of Canada, you can withdraw from your RRSP, but may not be able to buy stocks or other investments through your stock broker due to Canadian securities laws. I would suggest discussing your concerns with the broker that holds your RRSP. They should be able to explain any issues with your planned move.

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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Rohan Pathak October 14, 2009 at 2:40 pm

My wife is a Canadian citizen and has an RRSP account since she was working in Canada. She moved to US a few years ago and is now a US permanent resident. She hasn’t made any new contributions after coming to US.

She has some money sitting as cash in RRSP that she would like to invest soon. Can she trade in the RRSP account (buy/sell stocks, ETFs) as a US permanent resident?

Tax Guy October 14, 2009 at 2:58 pm

@ Rohan:

If the money is in cash and she is no longer a resident, re-investing in the RRSP is probably not allowed (she needs to be a resident to buy securities).

She should consider moving the funds to the U.S. There will be 25% withheld when the RRSP is moved and she may have some U.S. tax consequences as well.

Take a look at the attached article by Tim Cestnick.

Laura February 27, 2010 at 7:39 pm

I’m Canadian, living as a permanent resident in the US. I don’t see myself moving back and want to cash out my small amount of ~$5,000 RRSP. I think I initially invested that amount and it is currently worth lower than that now. The thing is, I haven’t claimed on my US income tax that I had foreign investments, because it was such an insignificant amount, since I moved here 9 years ago. Could you please advise on what I should do? Thanks.

Tax Guy February 27, 2010 at 9:18 pm

@Laura: Ideally you should have disclosed the account and filed forms with your 1040 claiming the treaty exemption. You should contact a CPA and see if you should make a voluntary disclosure.

Once you make the withdrawal, the US will treat it just like a withdrawal from an IRA except there is no 10% penalty tax.

Rob June 9, 2010 at 12:58 pm

my wife and I are moving to Mexico this year, next year I would like to be able to access my RRSP’s (for emergencies if necessary). Any suggestiions

Tax Guy June 9, 2010 at 10:49 pm

If you are ceasing to be a resident then a lump-sum payment would be taxed at a rate of 25% for non-residents. You could turn it into a RRIF just before leaving and those payments would be subject to a 15% withholding. These payments may be taxed in Mexico as well.

Beyond that, I have no suggestions.

Rob June 12, 2010 at 12:50 pm

I have approximately $30,000 in an RRSP and I’m 44 in age, I would like to use the money as either a financial safety net or invest it into a business my wife and I want to start in Mexico. If I was to take the money as a lump-sum in 2011 and I pay the 25% rate could I/should I then file a tax return in Canada for the 2011 tax year? I plan on leaving my job before the end of the 2010 tax year so I suppose I could look at removing the money this year and see what the tax hit would be

Rob September 29, 2010 at 2:13 pm

OK so I convert to a RRIF before I move do I have to take the money in a lump sum of can I decide to divide it into monthly withdrawals?

Tax Guy September 29, 2010 at 2:59 pm

You can take your RRIF minimums as an annual payment, monthly, weekly etc.

Tax Guy June 12, 2010 at 9:48 pm

Once you are no longer a resident of Canada you do not file a return unless you have real estate (or other taxable Canadian property, of which an RRSP is not). The 25% withholding is a non-resident tax and you can’t get it back from Canada. You might get a credit from Mexico because the de-registration may have a tax impact to you in Mexico.

Use the site calculator to figure out your tax option as a resident of Canada. Enter your income before and after the transaction. http://blog.taxresource.ca/tax-rates/2010-personal-income-tax-calculator/

Jordan August 17, 2010 at 3:41 pm

I am a Canadian citizen and am planning to move to Australia for a year or two to do a working holiday visa. By the time I leave at the end of Oct 2010 I will have rrsp investments of about $4000 in a company matching rrsp account. For this year (2010) I am eligible to purchase a total of $27,000 in rrsp’s.
My thought was to take out a short term loan and purchase an extra 10,000 in rrsp’s before I leave for Australia and then withdraw all of my rrsp investments in January of 2011. With the way I am currently seeing it (which is probably incorrect) this should get me a significant amount of taxes back for 2010, and then the only income I will be taxed on in 2011 in Canada would be my rrsp withdrawals of approximately $14,000, which the 10% withholding tax should cover. Is this kind of thing allowed? Or would the rrsp’s I withdraw be taxed in Australia? Is there a minimum amount of time that you must leave your money in an rrsp to avoid unexpected clawbacks? Any other issues I may face with trying to do this?
I will be working in Australia at mostly temp jobs and the like, as well as I will most likely not have a permanent residence in AUS. At any time, as the main reason for me going is to travel.
Any advice on this would be greatly appreciated. Thank you for your time.

Tax Guy August 19, 2010 at 11:01 am

The first thing you need to make sure you do is to cease to be a Canadian resident before you make the withdrawal. Failure to get confirmation from the CRA could affect your plan.

If you are not a resident of Canada and make a lump-sum withdrawal from the RRSP, you would be subject to a 25% non-resident withholding tax on the withdrawal.

If you happen to be a resident of Australia for tax purposes at the time of the withdrawal, the distribution may be considered Australian taxable income. If so, tax rate in Australia would apply at a rate of 15% on amounts over $6,000 AUD and 30% on amounts over $6,000AUD and below $80,000AUD.

No matter how you look at it, the bare minimum tax you might pay would be 25% flat.

Martin September 13, 2010 at 10:32 am

Hi Tax Guy,
I’ve been working in Canada for 2 years on a work permit and have now moved to the UAE.
Question is, how do I claim my RRSP back?
I tried the CRA website and it successfully added to my confusion.
Can you please give me some advise on this? It would be greatly appreciated.
Thank you very much,

Tax Guy September 13, 2010 at 1:38 pm


I’m not entirely sure what you mean by “claim my RRSP back” but I will do my best to answer what I think you are asking.

It sounds as if you were in Canada for only a short time and had accumulated funds in an RRSP and would like to move these funds out of Canada. If so, you need to contact the financial institution in Canada and withdraw the funds. You will then have to pay a 25% withholding tax.

Alternatively you can turn the account into a RRIF and draw funds over your lifetime subject to a 15% withholding tax.

Nick W October 14, 2010 at 8:12 am

I’m a Canadian non-resident now living in Switzerland. My rrsp in Canada has a fairly substantial amount (for me) invested in various stocks, bonds, funds, and cash. My current broker (scotiaitrade) recently said they don’t handle “non-resident” accounts, and my bank (CIBC) will open an account but not let me buy anything. It is not an option to leave this money invested in “cash” or not actively monitor/ make decisions on the exsiting investments. What choices do I have? Is there no way for a non-resident to maintain an investment account?

Tax Guy October 14, 2010 at 10:59 am


The securities laws in Canada and agreements with other countries limit your ability as a non-resident to make investment decisions concerning your accounts in Canada. If you have become a non-resident, your accounts can remain in Canada but you generally cannot request buy orders (sells are normally OK).

The best you can do is transfer the proceeds to a bank RRSP and buy an RRSP GIC directly from a chartered bank (not a brokerage).

Dirk Brobbel February 9, 2012 at 9:09 pm

I am a Canadian citizen of 69 years old. I am planning to permanently move to Ecuador when I retire, probably by the middle of 2013 which is the year I turn 71. I know that I will have to convert my RRSP into a RIFF by the end of that year. I also know that I will be taxed 25% on all my income including pensions from Canada. In Ecuador I will pay no taxes on any off shore income. Would I be better off to cash in my RRSP before they are turned into a RIFF? Can a RIFF be cashed in?What might be my best option?

Tax Guy February 9, 2012 at 9:27 pm

Per article 18, only the amount of $12,000 of annual RRIF payments is subject to Canadian withholding tax at a rate of 15%. You should not withdraw the funds. Either take the regular RRIF payments or use the RRSP/RRIF to buy a registered annuity (both are “pensions”). The annuity would be easier since you might not be able to manage the investments in a RRIF.

See: http://www.collectionscanada.gc.ca/webarchives/20071126045738/http://www.fin.gc.ca/news01/data/01-058_1e.html

Carmen M February 25, 2012 at 2:41 pm

My husband and I are thinking of working abroad and are considering removing ourselves as Canadian residents. We’re currently looking into buying a house that we would rent out as supplementary income. We also have Resp’s for our daughter and some mutual funds. What are the implications of non residency and receiving rent money, as well as the resp’s for our daughter? Are we taxed on the rental money and can we still contribute to our daughter’s resp’s and how about some kind of a retirement fund for ourselves?

Tax Guy February 27, 2012 at 10:20 pm

There is a deemed disposition and exist tax on any gains. The rental property will be subject to tax in Canada and may present some issues for your tenants (they may end up responsible for your taxes).

You should hire a professional to advise you. Let me know via the contact form if you would be interested in our services.

Canzim March 11, 2012 at 5:32 pm

I ceased to be a resident of Canada 12 years ago. I live in the US and plan to convert my RSP’s to RRIFs and start paying myself a pension. Leaving nothing to chance I called my bank (TDCanadaTrust) to discuss the withholding tax rates and make sure that it would be the 15% applicable for the periodic payments I am planning (they will be less than 9% of BOY balance). My bank insists that the withholding tax is 25% in all cases for US non-residents. Has there been a change that I am unaware of? And if they do w/h 25% can i get back the 10% “error” without having to file a Canadian return? Lastly are there any firms that are better than others when it comes to RIF’s for non-residents?

Tax Guy March 11, 2012 at 10:50 pm

The payment must not be a lump-sum payment, should exceed the greater of twice the RRIF minimum or 10% of the value of the plan. Likely you are speaking to the retail people who have absolutely no idea how a RRIF works for non-resident payments.

Tell them to refer to Article XVII of the Canada US tax treaty and then read the definition of “periodic pension payment” in subsection 5 of the Income Tax Conventions Interpretation Act. Both documents are on-line (the treaty on the Department of Finance website and the Act on canlii.org). If they make the mistake, they have to fix it.

Otherwise see if you can move it to Edward Jones. I know their HQ people fully understand this stuff.

Dexxter April 4, 2012 at 6:47 pm

TD Canada Trust is all retail people and most of them don’t have any idea what they’re taking about when it comes to foreign tax treaties.

Ask to speak to a TD Waterhouse representative and they will dig it up for you. This is the Investment Brokerage arm of TD and they should be able to find whatever you need.

Dean Paley (Tax Guy) April 4, 2012 at 8:24 pm

The brokerage people do have a better understanding of this stuff.

Melanie June 6, 2012 at 12:52 pm

I will be moving to the States this August. I have approximately $20,000 in RRSP. I don’t know if I will be returning to Canada in the future. Should I cash all my RRSP before I leave or should I move my RRSP to RRIF? If I cash all my RRSP before I leave, the money will be added to my regular earning this year and be taxed at 35% (Federal and Provincial?). If I move my RRSP to RRIF and declare non residence. What is the RRIF minimum every year I can cash being a non-resident? Will the amount I cash taxed at 15%? Do I also need to pay US tax?

Also, when I move to the States this August, do I need to disclose to the custom officer I still have a RRSP account in Canada and file forms claiming the treaty exemption?

Thank you.

Tax Guy June 6, 2012 at 3:07 pm

Hi Melanie,

First of all, if you do not need to, don’t cash it in. That will save you the most amount of tax money. If you really need to want to cash it in, do it after you are not considered a resident of Canada for tax purposes.

Once a non-resident of Canada, and withdrawals are taxed at 25% by Canada. The withdrawal is taxed in the US, although not the same was as in Canada but you do get a credit on the US side so there is no double tax.

If you still have it when you file your US tax return, be sure to use form 8891 to claim the tax deferral under treaty.

You will need to file a final Canadian tax return after you are not a resident.

No, you do not have to tell US customs about the RRSP.

Melanie June 15, 2012 at 7:42 pm

Thank you.

I am leaving Canada this August and will be declaring non resident next year when I file my 2012 final tax return. I have decided not to cash my RRSP this year. Is it correct I should invest all my RRSP in stocks or bonds while I am still a Canada resident? (Since I won’t be able to re-invest in the RRSP when I become a non resident)

If I convert my RRSP to RRIF or purchase a registered annuitey, my withholding tax will be reduced from 25% to 15%? Is there an age limit to when I can convert them? Do I need to wait till age 71 or I can do it earlier? I am in my 30s. Also, do I need to be a Canadian resident in order to convert them?

Thanks for your help.

Tax Guy June 15, 2012 at 10:01 pm

You don’t need to be 71 to withdraw, convert to a RRIF or buy an annuity. You can do it at any age and no need to be a Canadian resident.

You may be able to make adjustments to the investment mix. Talk to your financial advisor.

Janet Essex June 14, 2012 at 7:30 pm

we currently have money in an RRSP which was originally money brought over from the uk in the form of a private pension, which was taxed in the uk, we are now having to move back to the uk, will we have to pay tax again on this money.

Tax Guy June 15, 2012 at 10:11 am

If you leave it in the RRSP, then there is no tax until its withdrawn.

Rizo July 10, 2012 at 1:08 pm


I have officially been a non-resident of Canada since 2005 and hold approx $70,000 in my RRSP account in my Canadian bank. From what I have read above, should I withdraw, I would pay 25% no matter what. However, I also noted that I do not need to file as I am a non resident; how then do I pay the 25% in taxes?

I have heard that as a non resident this is the ideal time to withdraw and put in an offshore account. But from what I have read above this is not wise.


Thank you!

Tax Guy July 10, 2012 at 1:19 pm

It depends on your long term plans and future expected tax rates. If you think your future rate will be higher than 25% then perhaps withdraw.

Rizo July 10, 2012 at 2:26 pm

Thank you for the quick response. How does one pay the 25% if you do not file (as a non resident)?

Is there a way to withdraw minimum amounts to avoid being taxed?

Tax Guy July 10, 2012 at 3:04 pm

Hi there,
The tax is deducted at source.

UK resident July 22, 2012 at 9:28 am

I am now a UK resident although holding an RRSP. The UK tax system does not recognise RRSPs, and considers income generated within the RRSP (interest or dividend income) as taxable foreign source income which I am expected to report on my UK tax return. This suggests that if I am sure I will permanently remain a UK resident, I might be better off in the long run cashing in the RRSP, taking the 25% one-time hit, and depositing the proceeds into a UK pension which is not taxed. Is that the correct way of looking at it?

Burlington Accountant July 25, 2012 at 11:12 am

I have little if any knowledge of the UK tax system and really cannot comment on the strategy.

Taking the funds would subject you to a 25% withholding tax. You have the consider whether taking an immediate reduction of 25% now versus just paying along the way is worth it.

UK resident February 10, 2013 at 11:34 am

Doing the calculations based on a 25% withholding tax, 30% tax rate, and 5% rate of return on investments, it appears to me that it is better to leave the money in the Canadian RRSP if my investment horizon is under 20 years. But if my horizon is longer, the rate of return is higher, or my UK tax rate is lower, then it’s better to move it to the UK.

Andrea Emsley December 18, 2012 at 1:29 am

We are non residents on Canada as of May 1 2011. We have settled in the UK and intend to remain. We have about 50000 in a LIRA and about 8000.00 in RESPs for our children. I understand we can withdraw the funds in the LIRA and pay the 25% non resident tax after two years on non residence. What about the RESPs. I am not sure but I think that we can forfiet the government contributions, pay the non resident tax on the remaining balance and cash in these funds as well. Is this correct?

Al February 27, 2013 at 2:57 pm

I plan to move to Mexico in a couple years with wife and daughter. I want to know how to get a lump sum from my rrsp @ 15% withholding tax. I read 25% is standard unless there is a treaty. Mexico has a treaty, and I read 15%. Is this true? Does it matter how much I take out? I am 30 years old, does that matter?

Tax Guy - Burlington Accountant February 27, 2013 at 3:06 pm

Lump-sum withdrawals are always 25%. It’s only annuity payments from an RRSP or RRIF payments that would qualify for the 15%.

Mark March 25, 2013 at 3:07 am

I just moved from Canada to Australia. I have decided, at least for now to remain a tax resident of Canada and Australia (Yes, two places at once). I was wondering what taxes (Canadian or Australia or both) I have to pay on a RRSP withdrawal?

Tax Guy - Burlington Accountant March 25, 2013 at 9:19 am

The facts will determine your tax residency more than anything else and once that is determined then you can determine whose tax laws persist.

Mark March 25, 2013 at 8:45 pm

From my understanding it is much easier to remain a tax resident of Canada than to show otherwise. I did move to Australia with my wife (She got a partner visa) and ship our belongings, though we kept our Canadian bank accounts, credit cards, health cards and licenses. We are just playing it by ear.

If I was a tax non-resident, I think I would pay a 15% withholding tax (Australia Tax Treaty).

If I am a tax resident of both Australia and Canada, I would guess that an RRSP withdrawal would mean that I paid Canada income tax first, then Australian income tax.

In either case above, I am unsure on what happens with a tax free savings account.

Mark March 25, 2013 at 9:01 pm

I think I made a small mistake above. For an RRSP withdrawal, I think the withholding tax is 25%. The line should read:

If I was a tax non-resident, I think I would pay a 25% withholding tax.

Tax Guy - Burlington Accountant March 25, 2013 at 11:28 pm

You moved your home and family and possessions to another country, have residency there and all you have here are some bank accounts and a drivers license. You may have already actually stepped off the edge.

Non residents will pay 25% on lump-sum withdrawals from an RRSP. You would have to convert to a RRIF and take small annual payments to get the 15% rate.

Mark March 26, 2013 at 2:15 am

Currently, there is a chance we might move back to Canada towards the end of the year. Personally I am just doing a bit of travel with my wife, playing it by ear and just looking for a convenient way to withdraw some of my RRSP funds. Since I am not earning $$$, my tax free threshold for Ontario, Canada is the first $9k and Australia is the first $18k.

From what I have read, I think that if I left Canada for something like a one-year employment contract and there is evidence that I intend to return to Canada, the CRA will consider me to be a factual resident of Canada.

However, I think if I was to move with the intent of remaining outside Canada for a numbers of years, but return for unexpected changes than I would a non-resident during my time in Australia.

It seems that you need to jump through hoops to become a non-resident for tax and a big weighing factor on that classification is based on intent. Can I just choose to keep my Canadian tax resident status?

Also, if I was a tax resident of both Australia and Canada what would happen if I withdraw from my rrsp?

Mark March 28, 2013 at 1:33 am

I think you are correct that I am most likely a Canadian tax “non-resident”.

Mark April 15, 2013 at 5:52 am

I posted a similar question on the Canuck Abroad website, and it sounds like there is a special 15% RRSP withholding treaty rate. Could this be correct?


Josh Massop April 8, 2013 at 5:09 am

Hi there,
I moved to europe (with my wife and 3 children) in June 2011, and from June through to December sold most of my personal belongings in canada – vehicles, RV ect… We kept our house and have had it rented since. Our official non-resident date was set at January 1, 2012. Right now we are filing for the first time as non-residents and only filing for our rental income. I have cancelled alberta health (late in the year due to securing int’l benefits plan), but kept my alberta drivers licence and some bank accounts and 1 credit card. I believe I had to keep the one account for sure due to having the rental property. We have rental contract in europe for our apartment, a vehicle in our names, employment and residency in the country we are in right now. I have a few questions: Do you think there is any chance revenue canada could “deem” us residents? If we were to move back this summer after 1.5 years away in your opinion would they want to tax me on my income for that year and a half?
On the other side of that – If I were to sell my house this spring – what tax would I be subject to?
Also I have about 150k in RSP’s and another 30 or so in RESP’s for my three children? If I sold all my RSP’s other than locked in money – I am guessing I would pay 25% tax on that? What about the RESP’s – is it best to just leave the money there?
What are the rules if I were to sell my house, but not take that money out of canada – but rather withdraw it in cash (300k+)? As a non-resident are there any rules on bringing/transferring cash back to Canada either in person, or through bank transfer to family members?
Thanks for the help

Jane November 14, 2013 at 11:25 pm

My husband has just retired and we have two dependant children living with us. We are planning to move to Ecuador next year. My husband retired from the federal government and he receives a monthly pension, we have $130,000.00 in RRSP’s and $5,000.00 in RESP’s. What are the benefits of filing non-resident status in Canada? (I am assuming his pension tax would be reduced from 25% to 15%). Also, we may return to Canada in 5 years time.
I am not eligible to retire for some years can I transfer my RRSP’s to his name then into RRIF before we leave?
Thank you for your help.

Tax Guy - Burlington Accountant November 27, 2013 at 3:51 pm

There are a lot of issues with severing ties with Canada for tax purposes which may negate any other short-term savings. Making an assessment in this forum though is difficult.

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