Withdrawals by a non-resident of Canada from his or her RRSP are subject to withholding tax. The amount of the withholding tax is dependent on whether a tax treaty exists between the taxpayer’s country of residence and Canada. If the taxpayer emigrates to a country which has a tax treaty with Canada that does not define “pensions”, then the Income Tax Conventions Interpretations Act, defines pensions to include RRSPs. The tax treaty may apply a different tax rate to periodic pension payments versus lump sum payments. Payments made before maturity of the RRSP (i.e. the age at which the taxpayer can withdraw funds from the RRSP) or full or partial commutation payments are not considered periodic pension payments unless the treaty states otherwise. RRSP withdrawals may be taxed by the taxpayer’s new country of residence.
