RRIF Withdrawals & Withholding Tax

Mandatory RRIF Withdraws - Each year, a formula is used to calculate your minimum RRIF payment. The mandatory payment must be made before the end of the calendar year. RRIF withdrawals are considered taxable income.

Request to Withhold Tax - Clients can request that financial institutions withhold a higher amount of tax than required by CRA. By doing so taxes are paid in advance with each withdrawal and the RRIF payments are received net of tax. Essentially, taxes are paid upfront.

Withholding Tax

  • If you withdraw the minimum RRIF payment - Financial institutions are not required to withhold any tax
  • If you withdraw any amount above the minimum payment – Financial institutions must withhold tax at source, and remit the tax to CRA on your behalf
  • In both cases, upon filing your tax return, taxes owed or refunded, will be determined by factors such as your taxable income and marginal tax rate