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How much withholding tax will my RRSP administrator deduct from my withdrawal?

The amount of withholding income tax is based upon the size of your withdrawal. This is so that you are paying the CRA a level of tax that is proportional to the amount withdrawn and included as taxable income in your current income tax return.

You should never assume that the amount of withholding tax deducted from your withdrawal is sufficient to cover the resulting income tax owing. The withholding deducted may not be sufficient to cover the tax you owe at your income tax bracket. You may have to pay additional income tax when you complete and file your annual income tax return.

Below is a reference chart with the withdrawal thresholds and the required level of withholding tax to be deducted:

Amount Withdrawn

CRA Withholding Tax Deducted

Combined CRA & Quebec Withholding Tax

Up to $5,000

10% Withholding Tax

21% Withholding Tax

$5,000 to $15,000

20% Withholding Tax

26% Withholding Tax

Amounts over $15,000

30% Withholding Tax

31% Withholding Tax

 

Note for Quebec Residents:  The provincial withholding rate is 16% added to the CRA withholding tax of 5%, 10% and 15% on withdrawals of under $5,000, $5,000 to $15,000 and over $15,000, respectively.

In addition, Quebec withholding tax only applies to single withdrawals from an RRSP. If you receive regular periodic payments (i.e. monthly), they are not subject to withholding tax.

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