Non-Resident Taxation on RRSP and RIF Withdrawals

Today’s blog will focus on non-resident taxation on RRSP and RIF withdrawals, and the ways that these taxes can be reduced.

Withholding Tax Rate

Generally speaking, the withholding tax rate on RIF payments and RRSP payments made to a non-resident in Canada is 25%. However, this rate can be reduced by virtue of a treaty between Canada and your country of residence.

Learn what you should consider before withdrawing funds from your RRSP’s.

Section 217 Tax Return

The withholding tax paid is generally the tax payer’s final obligation to the CRA. However, you can elect to file a tax return with the CRA under Section 217 of the Income Tax Act with the goal of getting some of your withholding taxes back. If the tax calculated, as per the section 217 return, is lower than the 25% withholding tax already deducted, then this return will be beneficial as the access will be refunded to you.

Want to know more about Section 217? We have all the information you need to know here.

Filing Due Date and Address

The section 217 tax return is due by June 30^th of the following year. However, if there is a balance owing, it is recommended that you pay and file by April 30^th to avoid interest from accruing. The return is filed with the International Tax Services Office.

Form NR5

Another way to reduce the non-resident withholding tax is to file form NR5 with the CRA. Based on the information contained in the NR5, the CRA will assess whether they can instruct the pair to reduce the withholding taxes taken off your payments. An approved NR5 form is valid for up to 5 taxation years. However, it requires you to file a section 217 tax return every year.

Form NR5 Filing Due Date and Address

Form NRA5 must be filed by October 1^st of the year, or before the first payment is due to the International Tax Services Office.

Here’s the tip

If you are a non-resident of Canada and tired of paying high taxes on RIF and RRSP withdrawals, consider filing a section 217 tax return and NR5 form.

ABOUT THE AUTHOR

ALLAN MADAN

CPA, CA

Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.

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