The financial institution that administers your RRSP account will send you a T4RSP – Statement of RRSP Income information slip after the calendar year end for the year your RRSP withdrawal occurred. On the T4RSP slip, in Box 22 – Withdrawal and Commutation Payment, will be the full amount withdrawn from your RRSP account. On the same T4RSP slip, in Box 30 – Income Tax Deducted, the total withholding Tax deducted from your RRSP withdrawal will be stated. Both of these numbers are entered in your income tax return. The withdrawal amount will increase your taxable income and the withholding tax paid will be a credit as income tax paid.
Careful consideration should be given to the secondary factors that an RRSP withdrawal may trigger. Namely, the resulting increased taxable income may negatively impact your Old Age Security and Guaranteed Income Supplement payments. The increase in taxable income may reduce benefits you receive from the province such as Pharmacy and Healthcare costs subsidies, which tend to be income based. A withdrawal from an RRSP may also negatively impact government transfer payments such as Family Allowance and GST refund payments.