Withholding tax is applied to any portion of a RRIF payment that is in excess of the minimum amount. For periodic payments, the minimum is pro-rated in equal proportions for the given year. The withholding tax rate applied is based on the aggregate amount requested that is in excess of the calculated minimum.
For non-Quebec residents the following withholding tax rates are used:
Example: The annual minimum is $2,400 and the requested withdrawal amount is $1000 per month. The aggregate annual withdrawal amount is 12 x $1,000 = $12,000, and the excess over the minimum is $12,000 - $2,400 = $9,600. Therefore, each monthly payment of $1,000 will consist of $200 minimum and $800 of excess amount. A withholding tax rate of 20% will apply on the $800 portion of each payment.
Based on 2014 Source Deduction Table for Quebec Income Tax, the calculation of withholding tax for Quebec RRIF periodic payment is:
Amount * Frequency - Annual RRIF minimum amount - Code A (annualized) no tax amount (i.e. 15,000 for the year 2014) = X (only if positive)
If X < = 92,028 then withholding tax rate = 16%
If X > 92,028 < = 118,572 then withholding tax rate = 18%
If X > 118,572 then withholding tax rate = 21.34%
All RRIF withdrawals are considered income and must be reported on your personal tax return. Form T4RIF (along with Releve 2 for Quebec) is issued annually to be used for income tax filing purposes.
Withholding tax is applied at source as an estimate to the tax liability to you as a result of RRIF income received. Any tax discrepancy will be determined when you file your personal tax return. At your discretion you may request that the payer increase withholding tax in order to reduce or eliminate a future tax liability.
Required minimum payments as a percentage of the market value of the assets as of December 31:
|AGE (at the beginning of the calendar year)||NON-QUALIFYING RIFs||QUALIFYING RRIFs*|
|< 71||Formula is 1/(90 - age)|
|94 or older||20.00%||20.00%|
*A qualifying RRIF is generally a Registered Retirement Income Fund entered into before 1993, having no funds or property in the plan in 1993 or later except funds or property from another "qualifying" RRIF.