Posted on: 10-08-10 12:59:06
As I know RRSP withdrawal at $5k and less has a withholding tax of 10%. Suppose the RRSP is withdrawn, say as a payout, on a monthly basis of $500, would the tax withheld be more than 10% since the total annual would be $6k? I am trying to work out a monthly amount that can be withdrawn from RRSP.
Quote:
Originally posted by KumarM
As I know RRSP withdrawal at $5k and less has a withholding tax of 10%. Suppose the RRSP is withdrawn, say as a payout, on a monthly basis of $500, would the tax withheld be more than 10% since the total annual would be $6k? I am trying to work out a monthly amount that can be withdrawn from RRSP.
NO. The total withholding tax would be $50 each time as it is based on each transaction.
So, if you withdraw $500 each month, you would receive $450 each month.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Thanks guys, much appreciated. Just wondering, will the bank charge a fee for this?
Thanks again.
Interesting. I am also planning ot move all the RRSPs either SBI or ICICI (in Canada). Both offer RRSPs per their websites. RRSP --> RRIF-->monthly income-->$ to Rs. I hope I am doing this right.
Kumar M
It depends. The withholding taxes on your RRSP withdrawal can be more than 10%. If you keep on making regular withdrawals and total of all those withdrawal for a specific fiscal year exceeds $5000.00 then withholding tax of 20% would apply as per CRA rules. This is applicable for all Canadian provinces except Quebec.
$ 0-5000------------10%
$ 5001-15000------20%
$15001 and more---30%
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He who has not acquired one of the following: religious merit (dharma), wealth (artha), satisfaction of desires (kama), or liberation (moksa) is repeatedly born to die
May be I spoke quickly. If I convert to RRIF, would the 10% (<$k) or 20% ($5-$10k) tax still applicable?
I want to add something regarding reply from ashedfc:
"If you are moving your money from Canadian $ to Indian Rs. you are actually making a currency decision for the future. Its hard to predict the strength of Indian Rupees vs Canadian Dollar.
Indian Rupees has a lot of problems on the currency, its the govt. necessicity to devalue the currency, thereby reducing purchasing power.
If you go by the past, any investment staying in CDN $ makes sense. There are several clients who have invested large chunk of money in Indian Rupees at say 8% interest or more, but the currency loss with end up generating negative return, because in 2003 CDN was 32 Rupees, & in 2010 its 45Rs.
It means, investments in Indian Rs making over 30% in this time frame & investments in Canadian $ making zero % is exactly the same."
In order to check tax evasion CRA wants banking institutions to take cumulative total of all the withdrawals from RRSP for a specific year let's say 2010 and apply withholding tax on the whole amount depending upon which tax bracket it falls under. Whether banking institutions follow CRA guidelines or not is a different story.
For RRIF minimum payment amount is never subjected to withholding taxes.
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He who has not acquired one of the following: religious merit (dharma), wealth (artha), satisfaction of desires (kama), or liberation (moksa) is repeatedly born to die
