Asked
Please no judgement but last year I decided to withdraw a large sum of money from my RRSP to pay off my debt. Of course when I did this I was taxed. My question is will this impact me when I file my taxes this year? Do I claim this withdrawal as income? I'm just trying to figure out if I'll be taxed on it again so I can prepare for a bill when I file this year.
Clint’s answer
Hello. Great question.
RRSP withdrawals are taxed upon withdrawing, however it is only an estimation that usually equates to 10%. Occasionally it may be different.
Will this affect your tax return this year? Definitely.
How it does greatly depends on other income and deductions you have.
For example:
-If you have lots of other income, and you sit in a mid to high tax bracket, you will likely owe more.
-If you have withdrawn a smaller amount ($15,000 or less) and have no other income, you should get a refund.
The RRSP will be counted as taxable income and should be claimed using an issued T4RSP slip.
January 5, 2025
Update, October 2026: The tax held back depends on how much you take out at once. Outside Quebec it is 10% on up to $5,000, 20% on more than $5,000 up to $15,000, and 30% on more than $15,000.
From Ask Clint: real questions from a Canadian public finance forum, answered by Clint Cole. Names are changed. This is general information, not advice for your situation, and rules and dollar figures may have changed since Clint answered. Terms