FAQ: Does the Platform Consider Withholding Tax When Calculating RRIF Withdrawals

The withdrawal shown is the full amount, before any withholding tax. The platform doesn’t calculate withholding tax per se, it calculates the final tax owing each year.

For example, if the Summary shows $5,000 then this is the full amount that the platform is calculating as the withdrawal.

What you may end up with could be less than $4,500 if your average tax rate is higher. For example, if your average tax rate is 15% then you’ll essentially be getting $4,250 by the time your tax is filed.

You may pay $500 in initial withholding tax, but the platform isn’t calculating withholding tax, it’s calculating your final tax owing for the year, withholding tax is just a pre-payment, your actual tax owing is calculated when you file your tax return.

The platform takes the tax owing into account when calculating the RRSP/RRIF withdrawal, so there is no need to add more to account for tax.