Withdrawing from a Canadian RRSP as a non-resident triggers a flat 25% Canadian withholding tax on the gross amount, deducted by your financial institution before the money reaches you. A tax treaty between Canada and your country of residence can lower that rate, but generally only for periodic pension payments rather than lump-sum withdrawals. If your total Canadian-source income is modest, filing a Canadian return under Section 217 may recover part of what was withheld. These are the Canadian RRSP withdrawal rules for non-residents in their working form: one default rate, a narrow treaty carve-out, and an optional filing that can claw money back.
The 25% Flat Rate on Non-Resident Withdrawals
Once the Canada Revenue Agency treats you as a non-resident, Part XIII of the Income Tax Act applies a flat 25% withholding tax to RRSP withdrawals, regardless of the amount.1Canada.ca. Rates for Part XIII Tax Whether you take out $3,000 or $300,000, the institution withholds 25% of the gross and sends you the net.
This is a common source of confusion, because residents of Canada face a tiered schedule instead: 10% on the first $5,000, 20% between $5,001 and $15,000, and 30% above $15,000.2Canada.ca. Tax Rates on Withdrawals Those tiers stop applying the moment you become a non-resident. There is no small-withdrawal discount for people abroad.
For Part XIII purposes, the 25% withholding is generally your final Canadian tax on that income. You do not have to file a Canadian return to settle it, though you may choose to file under Section 217 if doing so would reduce your bill.
When a Tax Treaty Lowers the Rate
Canada’s bilateral tax treaties can reduce the 25% default, but the relief is narrow. Most treaties cut the rate only on periodic pension payments, not on lump-sum withdrawals.
Periodic Payments vs. Lump Sums
Under the Income Tax Conventions Interpretation Act, a periodic pension payment is a recurring payment from a qualifying plan such as an RRSP or RRIF. The definition explicitly excludes RRSP payments taken before the plan matures and any lump-sum commutation payments.3Canada Revenue Agency (CRA). Applicable Rate of Part XIII Tax on Amounts Paid or Credited to Persons in Countries With Which Canada Has a Tax Convention Cashing out an RRSP in a single withdrawal almost always attracts the full 25%, even from a country with a favorable treaty.
The CRA draws the line based on how the payment originates. A series of monthly installments made under a single standing instruction counts as periodic. A one-off request, even if you make several through the year, counts as a lump sum.
The Canada–U.S. Rate: 15% on Periodic Pensions
For U.S. residents, Article XVIII of the Canada–U.S. Income Tax Convention caps withholding on periodic pension payments at 15%.4Internal Revenue Service. United States – Canada Income Tax Convention That covers recurring RRIF payments and annuity-style distributions from a matured RRSP. Lump-sum RRSP withdrawals stay at 25% because the treaty cap applies only where the recipient “is the beneficial owner of a periodic pension payment.”5Canada.ca. Convention Between Canada and the United States of America
The reduced rate is not automatic. You must notify your Canadian financial institution of your U.S. residency and file Form NR5 with the CRA to authorize the lower withholding. Without that paperwork, the institution has to withhold the full 25%.
Other Treaty Countries
Residents of other treaty countries may see different caps. Some match the U.S. 15% figure, some are lower, and some exempt small amounts. Your institution needs your current country of residence on file to apply the correct rate. If you have moved between treaty countries since leaving Canada, update your records before requesting a payment.
RRIFs and the Age 71 Deadline
December 31 of the year you turn 71 is the last day you can hold an RRSP, whether or not you live in Canada.6Canada.ca. RRSP Options When You Turn 71 By that date you must convert the plan to a RRIF, buy an annuity, or withdraw the full balance. Most non-residents convert to a RRIF, which preserves tax-deferred growth on the remaining balance and, importantly, opens the door to the treaty rate.
Once the account is a RRIF, scheduled minimum payments qualify as periodic pension payments under an applicable treaty. For a U.S. resident with the NR5 approved, that means 15% withholding instead of 25%.7Internal Revenue Service. Publication 597, Information on the United States-Canada Income Tax Treaty Anything you draw above the scheduled minimum, however, is treated as a lump sum and the excess portion goes back to 25%. Non-residents who want more than their scheduled amount in a given year should price out that gap before requesting it.
Confirming Your Non-Resident Status
All of the above depends on the CRA actually treating you as a non-resident. The agency weighs your residential ties: primary ties count most, meaning whether a home in Canada remains available to you, whether your spouse or common-law partner stays behind, and whether your dependents live in Canada. Keep the house and the family in Canada and the CRA will very likely treat you as a continuing resident regardless of where you spend your time.
Secondary ties accumulate: Canadian bank accounts, a Canadian driver’s licence, active provincial health coverage, social memberships. Individually minor, collectively they can tip a close case.
You can ask the CRA for a written opinion by filing Form NR73, Determination of Residency Status (Leaving Canada).8Canada Revenue Agency (CRA). Determining Your Residency Status The opinion is not technically binding, but your financial institution will rely on your confirmed status when choosing a withholding rate. Getting the determination on paper before your first withdrawal heads off disputes later.
The Departure Tax Boundary
Leaving Canada triggers a deemed disposition of most property at fair market value on your departure date, creating capital gains on any unrealized appreciation. RRSPs are explicitly exempt from this departure tax.9Canada.ca. Dispositions of Property for Emigrants of Canada The same exemption covers RRIFs, registered pension plans, and TFSAs. Your RRSP is not touched on the way out; Canadian tax arrives only when you actually withdraw.
The Forms and the Sequence
Non-resident withdrawals involve coordination between you, the CRA, and your financial institution. The order matters.
Form NR5: Authorizing the Reduced Rate
Form NR5 is your formal request to have the institution withhold at the treaty rate rather than 25%.10Canada Revenue Agency (CRA). NR5 Application by a Non-Resident of Canada for a Reduction in the Amount of Non-Resident Tax Required to be Withheld You file it with the CRA before the payment starts, listing your country of residence, the relevant treaty article, and the income you expect to receive.
If the CRA approves, it sends an authorization letter to your institution directing it to withhold at the reduced rate. Without that letter, the institution has no discretion and must apply 25%. Since 2011, an approved NR5 remains valid for five tax years before renewal.11Canada Revenue Agency (CRA). Important Reminder if You Filed Form NR5 Submit it well before your first expected payment.
The Withdrawal Request
The NR5 goes to the CRA. The withdrawal request itself goes to your financial institution. They are separate steps. The institution calculates the withholding using whatever rate the CRA has authorized; absent an authorization, 25% applies. You receive the net proceeds.
Form NR4: Your Year-End Slip
After each calendar year, the institution issues Form NR4, Statement of Amounts Paid or Credited to Non-Residents of Canada, showing the gross withdrawal and the tax withheld. The slip must be sent to you by the last day of March following the calendar year.12Canada.ca. Distributing NR4 Slips to Recipients Keep it: it is your proof of Canadian tax paid and the document your home country will want when you claim a foreign tax credit.
Recovering Tax Through a Section 217 Election
Non-residents receiving RRSP or RRIF income can elect under Section 217 of the Income Tax Act to file a Canadian T1 return and be taxed at graduated resident rates on that income instead of the flat 25%.13Canada Revenue Agency (CRA). Electing Under Section 217 – Who Can Elect When Canadian-source income is low, graduated rates plus personal credits beat 25% flat, and the CRA refunds the difference.
When It Helps and When It Doesn’t
The math favors the election when total eligible Canadian-source income is modest. Filing the T1 lets you claim non-refundable credits, including the basic personal amount of $16,452 for 2026. If those credits push your calculated tax below what was already withheld, you get a refund.
Substantial Canadian-source income can flip the outcome: graduated rates on a large amount may exceed the 25% already withheld. Run the numbers both ways before electing.
The 90% Rule
How much of the personal credits you actually get depends on what share of your worldwide net income comes from Canada. At 90% or more, you claim the full credits. Below that threshold, the credits are prorated, which sharply reduces their value.14Government of Canada / Canada Revenue Agency (CRA). Schedule B – Allowable Amount of Federal Non-Refundable Tax Credits Someone with a large foreign salary and a small RRSP withdrawal will see the credits shrink toward zero.
How and When to File
You file a T1 General return along with Schedule A (Statement of World Income). Only Canadian-source income is taxable, but you must disclose worldwide income on Schedule A because the CRA uses it to prorate the credits.15Canada.ca. Schedule A – Statement of World Income All eligible Canadian income has to go in; you cannot pick which RRSP or RRIF payments to report.
The deadline for a Section 217 return is June 30 of the year following the tax year. Miss it and the CRA will not accept the election.16Canada.ca. When to File a Section 217 Return Use your NR4 to report the gross income and the tax already withheld; the withheld amount is credited against your calculated tax, and any overpayment is refunded.
If You Live in the United States
American residents drawing on a Canadian RRSP have obligations on both sides of the border.
Under Article XVIII of the Canada–U.S. treaty, U.S. taxpayers can defer U.S. tax on income accruing inside an RRSP until distribution. Revenue Procedure 2014-55 made this election automatic and eliminated the old annual filing on Form 8891.17Internal Revenue Service. Rev. Proc. 2014-55 When you take a distribution, report it on Form 1040 and claim a foreign tax credit for the Canadian withholding shown on the NR4.
Separate reporting still applies. U.S. persons with foreign financial accounts totaling over $10,000 at any point in the year must file FinCEN Form 114 (the FBAR), and Canadian RRSPs generally fall within that requirement.18Internal Revenue Service. Report of Foreign Bank and Financial Accounts (FBAR) Form 8938 may also apply above its own thresholds. Deadlines and penalties for these forms run independently of your income tax return.
Some states do not follow the federal treaty and may tax income accruing inside an RRSP annually, and may deny credits for the Canadian withholding on distribution. That can produce genuine double taxation on the same dollar. If your state is one of them, price the full combined cost with a cross-border professional before you withdraw.