As a non-resident who withdrew RRSP funds at a resident rate, generating T4RSP slips, you need to file a non-resident tax return (NR4 slip) to report the income and potentially claim a refund of excess withholding tax.
Here's a breakdown of what to do:
1. Understand the Situation:
- Non-Resident Status: You are now considered a non-resident of Canada.
- RRSP Withdrawal: You withdrew funds from your RRSP, which is taxable income.
- T4RSP Slip: Your financial institution issued a T4RSP slip showing the RRSP income and tax withheld.
- Non-Resident Tax: As a non-resident, you are subject to a 25% withholding tax on RRSP withdrawals, unless a tax treaty with your country of residence provides a lower rate.
2. File a Non-Resident Tax Return (NR4):
NR4 Slip:
Your financial institution will issue an NR4 slip to report the RRSP withdrawal and the tax withheld.
File the Return:
You need to file an NR4 return with the Canada Revenue Agency (CRA) to report the income and tax withheld.
Electing under Section 216:
You can choose to file a separate return to report this income, which is called "electing under section 216 of the Income Tax Act". This allows you to pay tax on your net Canadian-source income instead of on the gross amount.
Guide T4144:
For more information, see Guide T4144, Income Tax Guide for Electing under Section 216.
3. Report the Income and Tax Withheld:
Line 12900:
Report the RRSP income from box 22 of your T4RSP slip on line 12900 of your income tax and benefit return.
Line 43700:
Claim the tax deducted from box 30 of your T4RSP slip on line 43700 of your income tax and benefit return.
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