Hello, Mr. Ingram,
I got an NR4 from TD due to my RRSP withdrawal in 2007. I just want to confirm that I do not need to file Canadian income tax. 25% tax was withheld by TD from my total RRSP.
Thanks and best regards,
For RRSPs opened more than 6 months, the feeis $50.00 per withdrawal. This is not related to the funds that youhold, but is only based on the age of the RSP account.
>Depending on how much you withdraw from your RSP, the withholdingtax will vary. The Withholding Tax for all Provinces except Quebec isas follows:
>Withholding Tax Rate Gross Withdrawal
>10% Up to $5,000
>20% Between $5,000 and $15,000
>30% $15,000.01 and over
>We would recommend that you exhaust all other avenues of financeprior to making a decision to redeem from your RSP, as your RSP isdesigned for retirement purposes and the fees and taxes may make itless attractive to withdrawal. You'll also have to claim the fundswithdrawn as income for the current year.
>Please note as well that all RSP redemptions must be claimed onyour income tax as part of your income.
>If you do need to complete a redemption, you can do so by callingEasyLine at 1-866-222-3456, available 24 hours everyday, and requestthe redemption through a representative. They would be happy to help.
>Concerning your tax related questions and statement, I'd recommendthat you also contact the Canada Revenue Agency for further assistance:
>I hope this direction is helpful. Thank you once again for writing.
>Internet Correspondence Representative
>TD Canada Trust 1-866-222-3456
>TDD (Telephone Device for the Deaf) 1-800-361-1180 (toll free)
>This email is directed to, and intended for the exclusive use of,the
>addressee indicated above. TD Canada Trust endeavors to provideaccurate and up-to-date information relating to its products andservices. However, please note that rates, fees and information aresubject to change.
david ingram replies:
As a non-resident of Canada, the withholding on your RRSP is 25% of thegross withdrawal whether you take out $5,000 or $500,000. The CanadaTrust directive you received is in error about the withholding rate butI expect it is a form letter and does not reflect your non-residentstatus.
The Canada Trust directive is also in error about the necessity to filea Canadian return. When the 25% is withheld, Canada Trust should issuea T4RSP-NR showing the gross withdrawal and the 25% withholding.
This is the end of your tax filing responsibility to Canada unless theCRA specifically asked you for a world wide income statement which theycan do. If they were to make such a request, you would report yourworld wide income and deduct it all on Line 256 of the T1 under ArticleIV of the US/Canada Income Tax Convention (Treaty).
For the US, the amount that is taxable on your US 1040 and your NewJersey or New York tax return is the difference between the RRSP'svalue on the day you left Canada and the day you cash it in.
Against that profit, you will be able to claim the pro-rata basis ofthe 25% tax paid to Canada as a foreign tax credit on form 1116.
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