Canadian RRSP withdrawal

[Samnorman21]

Hey folks,

question re tax. I have ~$180k in RRSP and DSPP funds in Canada I want to take out to buy a new house now back in the UK.

for the last 12 months I’ve been paid by Canada through SunLife on disability, this will up for review end of fiscal and I will be transferring to the uk firm and for mailing moving back to England to start here.

given this year I have been on 50% salary ~$125k it will be lowest earning year until retirement (I work in consultancy) so the right time to withdraw as need funds to buy a house.

what are the impacts and cost to me of withdrawing this fiscal year? Having already earned 125k by year end. I also claim my wife’s tax allowances as she doesn’t work.

The other potential question is could I withdraw next year in Canada, and earn nothing in Canadian and not declare uk salary (as may be equity partner then and could ask for a salary deferral)

thanks community

​​​​​​​S

[GreggKent]

Hey there!

Withdrawing from your RRSP will be taxed as income in Canada, so adding $180k to your $125k income this year could push you into a higher tax bracket, resulting in a significant tax hit. Since this is your lowest earning year, it might still be the best time, but you’ll need to weigh that against the potential tax liability.

If you wait to withdraw next year while being a non-resident of Canada, you may face a flat withholding tax of 25%, which could be simpler and possibly less expensive than being taxed at your current income rate. Not declaring UK salary could be complex, though, especially with your potential equity partnership and any tax treaty implications between Canada and the UK.

Given the complexities, it might be wise to consult with a tax professional familiar with cross-border tax issues to get tailored advice. Good luck with your move and house purchase!