Hello, Mr. Ingram,
I was planning to withdraw my RRSP because it
is not making that much money
in Canada. I have other investment ideas
and I can use the money here in
the US. As per you info, the tax
withheld is 25%. TD will be charging me
30% as the RRSP value is over
$15,000. TD is also saying that I have to
claim the funds withdrawn as
income for 2007. I thought I do not need to
file a Canadian Income
Tax. I also thought that I only need to declare in
my US tax return the
meager RRSP earning from the date that I left Canada
(May 2003) to the time
that I withdraw the RRSP.
Your thoughts, please.
Thank
you.
xxxxxxxxx >From:
[email protected]>To:
>I appreciate your interest
in redeeming from your RSP account. Thank you
>for taking the time to
write.
>
>There is some important information that you should be
aware of when
>considering a redemption from your RSP. If your RSP has
been open for less
>than 6 months, the fee is $100.00 per withdrawal. For
RRSPs opened more
>than 6 months, the fee is $50.00 per withdrawal. This
is not related to
>the funds that you hold, but is only based on the age
of the RSP account.
>
>Depending on how much you withdraw from your
RSP, the withholding tax will
>vary. The Withholding Tax for all Provinces
except Quebec is as 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 finance prior to
>making a decision to redeem from your RSP, as
your RSP is designed for
>retirement purposes and the fees and taxes may
make it less attractive to
>withdrawal. You'll also have to claim the
funds withdrawn as income for
>the current year.
>
>Please
note as well that all RSP redemptions must be claimed on your
>income tax
as part of your income.
>
>If you do need to complete a redemption,
you can do so by calling EasyLine
>at 1-866-222-3456, available 24 hours
everyday, and request the redemption
>through a representative. They would
be happy to help.
>
>Concerning your tax related questions and
statement, I'd recommend that
>you also contact the Canada Revenue Agency
for further assistance:
>
>
http://www.cra-arc.gc.ca/menu-e.html>
>I hope this direction is helpful. Thank you once again for
writing.
>
>Best regards,
>
>
>Internet
Correspondence
Representative
>____________________________________________________________
>TD
Canada Trust 1-866-222-3456
>http://www.tdcanadatrust.com>Email: [email protected]
>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 endeavours to provide accurate
>and up-to-date information
relating to its products and services. However,
>please note that rates,
fees and information are subject to
change.
>1trm
_________________________________________________________________
david
ingram replies:
As a non-resident of Canada, the withholding on your RRSP
is 25% of the gross withdrawal whether you take out $5,000 or $500,000.
The Canada Trust directive you received is in error about the withholding rate
but I expect it is a form letter and does not reflect your
non-resident status.
The Canada Trust directive is also in error about
the necessity to file a Canadian return for the same
reason. When the 25% is withheld, Canada Trust should
issue a T4RSP-NR showing the gross withdrawal and the 25%
withholding.
This is the end of your tax filing responsibility to Canada
unless the CRA specifically asked you for a world wide income statement which
they can do. If they were to make such a request, you would report your world
wide income and deduct it all on Line 256 of the T1 under Article IV of the
US/Canada Income Tax Convention (Treaty).
For the US, the amount that is
taxable on your US 1040 and your New Jersey or New York tax return is the
difference between the RRSP's value 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 of the 25% tax paid to Canada as a foreign tax credit on form
1116.
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