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Where Taxpayers and Advisers Meet

Tax on final RIFF payment to UK-resident pensioner

Edinburgh Annie
Posts:1
Joined:Wed Jan 29, 2020 10:53 pm
Tax on final RIFF payment to UK-resident pensioner

Postby Edinburgh Annie » Thu Jan 30, 2020 12:54 am

I am a UK citizen who lived in Canada for 5 years, and became a Canadian citizen before returning to the UK in 2004. I have been permanently resident in Scotland, UK, for tax purposes since then. Whilst in Canada, I built up an RRSP which was converted to a RRIF when I retired in 2013. As it was a relatively small RRIF, my RRIF pension was sent to me annually each year, and was always no more than 10% of the fund value as at the last yearend (in order to avoid Withholding Tax and submission of an annual tax return to Canada Revenue). In the UK, I have paid tax (at the 20% rate) on 90% of the RRIF payment received each year, per HMRC's instructions.

This year, for personal reasons, I requested that 100% of the remaining RRIF pension (about $32,000 CDN or £18,500) be sent to me in January 2020, expecting that Withholding Tax would be applied before it was actually transferred. However, no Withholding Tax was withheld, and I'm now wondering:-

1. Is any Withholding Tax actually payable to Canada Revenue in this case? If so, at what % rate?
2. Will I have to submit tax returns to BOTH Canada Revenue (for 2020 fiscal year) and HMRC (2019/20 fiscal year) whether Withholding Tax is payable or not?
3. Under the dual taxation treaty, will I be able to claim any tax relief/credit for tax due/paid to Canada Revenue in my HMRC tax return? If not, will I be taxed by HMRC on the RRIF amount BEFORE or AFTER any Withholding Tax has been applied?

Edinburgh Annie

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