Comments on: RRSP’s, Investments and Leaving Canada

By: Tax Guy

Tax Guy — Fri, 10 Feb 2012 02:27:58 +0000

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

By: Dirk Brobbel

Dirk Brobbel — Fri, 10 Feb 2012 02:09:44 +0000

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?

By: Tax Guy

Tax Guy — Thu, 14 Oct 2010 15:59:17 +0000

Nick,

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).

By: Nick W

Nick W — Thu, 14 Oct 2010 13:12:35 +0000

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?

By: Tax Guy

Tax Guy — Wed, 29 Sep 2010 19:59:28 +0000

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

By: Rob

Rob — Wed, 29 Sep 2010 19:13:25 +0000

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?

By: Tax Guy

Tax Guy — Mon, 13 Sep 2010 18:38:46 +0000

Martin,

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.

By: Martin

Martin — Mon, 13 Sep 2010 15:32:35 +0000

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,
Martin

By: Tax Guy

Tax Guy — Thu, 19 Aug 2010 16:01:31 +0000

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.

By: Jordan

Jordan — Tue, 17 Aug 2010 20:41:38 +0000

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.