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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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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If your only parent dies, and the will has been made out showing both sons as beneficiaries, do they have to pay any taxes on a house, canada savings bonds, riffs, rrsp and/or cash that is in their account etc.

There is no inheritance tax in Canada only a provincial probate fee. In Ontario it is 0.5% on the first $50,000 within an estate and 1.5% after that. Where inheritance taxes come in, is on the deceased. All of their assets are deemed to be disposed of just prior to death. That means all RRSPs/RRIFs are cash out and added to the deceased's terminal tax return and any capital gains on investments, rental properties, businesses, etc are also added to their income. Since this number can be quite high, most people that die with money end up in the highest tax bracket and end up paying a lot of taxes before any proceeds are paid to their beneficiaries. The beneficiary of an estate will not be required to pay tax upon receipt of this money.

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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 looking to begin investing, and i will be putting all my expendable cash to invest in dividend paying stocks. i've read that rrsp's may not be the best route to go in my case, because dividend income is very favorably taxed in canada. before i take their word for it, i thought i'd get both sides of the story. for/against rrsp when investing in dividend paying stocks in canada

Dividends are taxed in Canada wether you receive them in cash or they are automatically re-invested in additional shares. So the tax situation does not affect the advantages of a RRSP. You are wise to invest in solid dividend paying shares on a regular monthly basis, because you get the advantages of dollar cost averaging and the regularity of investing is what ultimately results in a large nest egg at retirement (even at age 50 or 55), because of the compounding growth of stocks at approx. 10% over the long haul.

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Is this the time, between now and say summer, for the average investor to borrow money to purchase buy and hold stocks? a basket of normally expensive blue chip type stocks that have high dividend yields and are thought to be value priced in this current market?. these stocks are expensive to buy for investors like me who invest using a portion of our paycheque. we are forced to purchase index funds/mutual funds until our wealth is high enough that we can justify paying brokerage and trading fees for etf's or individual stocks. perhaps now is a time to consider borrowing money to purchase long-term buy and hold dividend yielding stocks because the dividend yields and potential share price increase will erase the cost of the transaction fees. here are my thoughts: -yes dividends are not considered safe until they are paid but once paid for me they are taxed at 25% of my normal income tax rate (cash interest is taxed at the full rate for example).. -assuming (in canada) the interest owing on borrowed money used to fund equities purchases is tax deductable. -or else i can borrow money to contribute to a retirement tax shelter (rrsp) and instead of claiming interest as a tax deduction, i would get a automatic reduction of income taxes owing. in my case it'll be 34% of the amount i contribute to the retirement shelter. -as a personal creed i never borrow money unless i have an equal amount available to pay off that debt. now this may not be a course of action for myself but what about others? is leverage recommended for the little long term investor?

just so the returns are greater than the carrying costs of the loan. And if so will that continue to be the case.

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I understand resp's can be cashed for "educational" purposes (tax-free i pressume). i have canada student loans from a few years back that i'd like to pay off and am curious if this would be one such "educational" purpose. last year, i bought some rrsp's to maximize my tax return, and if i transferred these into an resp account for myself, could i then cash it to pay off my loan without being taxed?

As I recall, my kid's RESP money was taxable in his name when he took it out and there was some limit on the amount per semester after the first bulk payment. But there are different plans. You really need to check with Revenue Canada about this.

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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 :-)

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I was with an employer for 4 years. i resigned a month ago and recently received a letter regarding "statement and election of pension benefits". i have 2 options: -take a cash refund or -put it into a non-locked-in transfer to my rrsp the amount is not huge, so i would like to take the cash refund. however, it states that 'appropriate taxes will be withheld at source' if we choose the cash refund option. i'm not sure what that means - will they take taxes off and then give me the rest of the money? or will they pay me outright and i will have to claim it as income? i don't want to take the money unless they take taxes first and don't have to claim it as income. i am in ontario, canada if that helps. answers appreciated. thank you.

The money referred to is money that was put in the company pension plan for you. Money deposited into pension plans is not taxed until you begin receiving your pension. Therefore you have paid no tax on these pension contributions. If you simply transfer the money into an RRSP, it will remain untaxed until you begin withdrawing from the RRSP. If you take the cash now, you will have to pay tax on it at your current tax rate. The company will deduct the appropriate amount, remit it to Stephen Harper, and provide you with a cheque for the difference. If you don't really need the cash now, you should consider putting it into an RRSP. It may seem like a small amount now, but with the magic of compound interest, it should grow to a sizable amount before you begin living off your pension. Withdrawals at that time will also likely be at a lower tax rate, assuming your income today is higher than what you will be living off when you retire.

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Thank you in advance to all who respond. i make under $40,000 per year and the amount of the bonus is less than $2,000. these are my options for what to do with my bonus pay: 1. if you decide to put the merit bonus into your rrsp account, there is no tax on the bonus amount, but you still have to pay cpp and ei, which will be deducted from your regular pay. with this option, you get a tax break on the merit bonus, but your regular net pay amount will be lower. 2. if you decide to cash the merit bonus, we will do the bonus payment separate from your regular pay, so you regular pay will remain the same while the tax calculation on merit bonus will be higher. since the bonus earning is on top of your salary, the tax rate on bonus will be in the highest level of your tax brackets. yes charles... i am wondering what is the best use of the money. my financial know-how is limited and i am trying my best to learn. i have a mortgage with 4.25% interest rate that i will be renegotiating soon and could pay down a little of that so that there is less to pay back (it is not a significant amount of money however). other than that, i have no significant debt. someone suggested i put it in my rrsp and then take it out because it would be taxed at a lower rate and then deal with it when i do my tax return. i don't think i understand the advantage of that. thanks quizzard... i am looking into how they do the calculation. : )

What is the question? Which option to pick? You have to decide. Do you want to put the bonus money into an RSP or not? Do you need the money to pay off debt, or can you commit it to retirement savings. I always choose #1 because its a quick way to put a large contribution into my RSP. However this decision depends on your own personal situation.