What is the tax rate when I withdraw some of my RRSP money? I know there is an amount taken off right away but what is the rate payable at tax time?

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What i am saying is if i was to not claim my rrsp's every year and cashed them in when i decide to retire, would i still have to pay taxes on them? has anybody ever done a study to see if it is beneficial?

If you are carrying forward your RRSP contributions in hopes of using them in a future year, and have submitted a Schedule 7 (http://www.cra-arc.gc.ca/tax/individuals/topics/rrsp/contributing/unused-e.html) you can cash them out tax free, paying tax on the gains only. Registering them provides the tax break. It simply defers taxes to when you cash them in. Since you get a tax refund from the investment coming off your taxable income, it will be taxed later. This would have the same effect as purchasing mutual funds in a non-registered account. You pay capital gains on the difference between the value invested and the value taken out (save a few premiums, etc.). If you are contributing to an RRSP and not claiming the contribution, be sure to fill out Schedule 7 to protect yourself later. As well, be sure you're not overcontributing, or there are penalties that would eliminate any advantage to your idea. Information about excess contributions can be found at http://www.cra-arc.gc.ca/tax/individuals/topics/rrsp/contributing/excess-e.html If you would like to know how to withdraw your unused contributions, check out http://www.cra-arc.gc.ca/tax/individuals/topics/rrsp/withdrawals/unclaimed/menu-e.html I hope this helps.

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If he puts the cash in an rrsp is that a way to save taxes?

If he SELLS the house, yes, this triggers captital gain. The cost basis of the house is the market value on the day of death of the person he inherited it from, so it this is recently, the tax will be minimal or none. He can then invest the proceeds after taxes.

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I have recently become unemployed and am considering cashing out some of my rrsp's to pay off my mortgage. i know rrsp's get taxed at nominal rates when cashed out. does being unemployed provide any advantages in reducing the taxes taken up front? are there any special circumstances/manoeuvres that reduce the taxes paid up front?

Cashing in your RRSP is never a great solution so consider loans before you do. But if you must, the thing to consider here is how much you intend to cash-in for your RRSPs. Being unemployed simply means that you will not have employment income this year (or very little, if you still worked earlier in the year before unemployment) but keep in mind other sources of income like investment incomes, benefits, etc. to determine your total income for the year and see if the cashed-in RRSP would take you into a higher tax bracket, especially if you take out a large amount. (as it is considered income) So the only "advantage" as you say is having less total income to report for the year but being unemployed does not affect your withholding taxes . Withholding taxes are taxes taken at the time of the cash-out by the bank. They rates are something like this: Withdrawal Amount % Tax Withheld From $0 to $5,000: 10% (5% in Quebec) From $5,001 to $15,000: 20% (10% in Quebec) Greater than $15,000: 30% (15% in Quebec) As you know the withholding taxes are quite significant and they are taxed on each lump sum amount you cash-out. You have the option of taking out smaller lump sums throughout the year to reduce the tax taken off the top. (ie. instead of cashing out a lump sum of $20,000, with 30% withholding tax, take out four $5,000 sums throughout the year with 10% each.) Of course, keep in mind how it may affect your income taxes for April when you do this. Good luck

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I have $8k in canada student loans left and have the cash to pay them off but it just doesn't make sense to me when i get an income tax credit for the interest paid. isn't it essentially an interest-free loan? is there another reason why i should pay it off? i am looking at buying a house in about a year's time. from what i gather, it would be better to put the cash into my rrsp which i can then use to buy the house. am i wrong?

Guess you don't know how taxes work. The Canadian tax rate is NOT 100%, so why would you want ot pay $100 in interest to save $15. You would still be paying the other $85. (It's not a credit, but a deduction.)

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I am in the process of settling my divorce. i have just recently purchased a house and now have a fairly substantial mortgage. i am hoping to retire in 5 years. the money that i was hoping to get from the settlement is a little less than i was hoping for but figured i could swing it anyways. however , i have just now been informed that i will not be getting cash (as i had hoped) but will be getting my ex's rrsp investments transferred over to me. therefore, unless i want to be taxed at 43% of 160,000$ this year for income tax i cannot withdraw the money and pay off my mortgage. whatever i withdraw is apparently added to my income and i have to pay taxes on the whole thing. so...what would be the best way to pay off my mortgage in a reasonable time frame so i am not being taxed to the hilt and not having to eventually be living from pension cheque to pension cheque each month, paying off a mortgage, bills, food, etc, for the rest of my life and not knowing where the next $ will be

Withdrawing the money to pay down the mortgage may be a bad idea even if the tax man were not lurking in the shadows -- mortgage money is cheap, and the RRSP investment may have a higher yield than the mortgage interest rate. So, leave the mortgage in place and draw, if you must, on the RRSP at the smallest rate that you can manage.

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I just retired in 2008. my severance pay from my employer totals $49,000, as follows: 1) $40,000 relates pre 1996 years of my employment, and will be eligible to be directly transferred into my rrsp account. 2) i have $3,500 in my 2008 rrsp contribution room per my 2007 notice of assessment, and therefore i will also transfer $3,500 of my severance pay into my rrsp account. 3) the remaining $5,500 will be cashed out with tax withheld at source. can i deduct my severance pay transfers of #1 and #2 above? i am not sure about the deductions because, especially for the $3500 of item #2, the transfer into my rrsp allows me to defer the income from 2008 to a future year when i withdraw it. for these two transfers or deferral of income, i will be allowed a deduction for item #1 & #2 ? my two transfers appear to be different from a "normal" rrsp contribution that requires using after-tax dollars to contribute/buy a rrsp deduction in the current year, but will be taxable for that amount when withdrawn in a future year. my two transfers involve severance pay amounts currently taxable to me in 2008 (if not transferred into a rrsp)?

You can deduct the items 1 & 2 severance pay transfers in 2008 per the tax slips provided to you by your broker or RRSP administrator, but you also need to report the severance pay income in 2008 per the tax slip provided to you by your former employer , basically sheltering the income amount into your RRSP until future years when you withdraw it. You appear to be not sure that the severance pay, after the rrsp transfer, still require you to report as income in 2008. In other words, it will be a wash 2008 for the first 2 items, just in and out for tax purposes in 2008, while you need to pay tax on item 3 in 2008.

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I am wondering if anyone has an idea or websites that i can look into about this. i have been left a $10000 rrsp in my mother's will. she left it for debt repayment or to keep. if i was to cash this out, how much taxes would i have to pay? and does that come right off the money or would i have to pay it come tax time? also is the amount of tax based on my income/family income? i'm not certain if i am going to cash it, or keep it and let it grow yet but i'm curious. thanks for any advice!

The $10,000 would be added to and taxed on your mother's final return. The amount would not be taxable to you but it would be an after tax amount. Any future earnings or gains on the money would then become your liability

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There are only 2 days left for 2008's rrsp contribution. i have no idea should i top my contribution or keep cash. i have 23k limit for 2008. i made about 110k in 2008. although i can pay whole amount, is it a good idea to go with loan? besides, my wife made about 68k in 2008, in my family case (we are in canada), please advise that should i top the contribution? thanks in advanced.

you can try this link of the IRS: http://www.irs.gov/irb/2003-50_IRB/ar10.html For the future you can try FileLate.com: http://www.filelate.com you will be able to file all you late tax returns here and they will answer all questions you have. I have used this online service before I can ask them any question ever since I completed my taxes with them, Good Luck :-)