Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Is withholding on RRSP payment lump sum
amounts calculated on a cumulative basis?
Position TAKEN: No
Reasons FOR POSITION:Prior opinions
XXXXXXXXXX 5-951972
Attention: XXXXXXXXXX
August 3, 1995
Dear Sirs:
Re: Rates of Withholding on RRSP Distributions
This is in reply to your facsimile of July 26, 1995, in which you requested clarification of the comments we made in the letter dated September 17, 1992 which was transmitted with your submission.
It has been determined that one of the comments in your copy of the letter in question has been altered from the original letter sent by the Department. Accordingly, it does not properly reflect the Department's opinion on this matter. The following reflects the proper information.
Composite federal and provincial withholding tax requirements with respect to payments out of or under an RRSP to the annuitant of the RRSP, other than (i) periodic annuity payments, or (ii) payments made by a person who has reasonable grounds to believe that the payments may be deducted under subsection 146(8.2) of the Income Tax Act in computing the income of any taxpayer, are as follow:
- 10% ( 5% for Quebec) if the payment is not more than $5,000;
- 20% (10% for Quebec) if the payment is more than $5,000 but not more
than $15,000; and
- 30% (15% for Quebec) if the payment is more than $15,000.
It is the Department's position that upon an election by a taxpayer to receive a lump sum payment out of an RRSP the withholding tax is calculated with respect to the payment made at that time and not on a cumulative basis.
We trust this clarification of our previous comments will be of assistance to you. However, should you require further clarification of any withholding provisions, we suggest you contact the Source Deductions Division of your local Tax Services Office or the Source Deductions Division of Head Office which may be reached at (613) 952-3580.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
c.c.: P. Rémillard
Source Deductions Programs
Source Deductions Division
Revenue Collections Directorate
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