Guide to the T4RSP: Understanding Your RRSP Withdrawal Slip

If you've withdrawn money from your Registered Retirement Savings Plan (RRSP), you'll receive a T4RSP — Statement of RRSP Income from your financial institution. This tax slip reports the amounts withdrawn and the tax withheld, and you'll need it to complete your income tax return. For newcomers to Canada who may be unfamiliar with RRSPs and Canadian tax slips, this guide explains everything you need to know. Understanding tax slips like the T4RSP is a crucial step in navigating the Canadian tax system and ensuring you file your annual return correctly. It helps you understand how your financial decisions impact your taxes and overall financial well-being.

See also: RRSP Guide for Newcomers

What Is an RRSP?

Before diving into the T4RSP, let's briefly review what an RRSP is. A Registered Retirement Savings Plan is a tax-sheltered savings account designed to help Canadians save for retirement. It's a powerful tool for long-term financial planning, allowing your investments to grow significantly over time. Key features include:

• Tax-deductible contributions: Money you contribute to your RRSP reduces your taxable income for the year, potentially lowering the amount of tax you owe. For example, if you earn $60,000 and contribute $5,000 to your RRSP, your taxable income becomes $55,000.
• Tax-deferred growth: Investments inside the RRSP grow tax-free until withdrawn. This means you don't pay annual taxes on interest, dividends, or capital gains earned within the plan, allowing your money to compound faster.
• Taxed on withdrawal: When you withdraw money, it's added to your taxable income for that year. The idea is that you will likely be in a lower tax bracket in retirement, making withdrawals more tax-efficient then.

Your RRSP contribution limit is based on your earned income from the previous year, up to a maximum amount set by the Canada Revenue Agency (CRA). You can hold various investments within an RRSP, such as GICs (Guaranteed Investment Certificates), mutual funds, exchange-traded funds (ETFs), stocks, and bonds. The "registered" aspect means the plan is recognized by the CRA, allowing it to receive these special tax benefits. It's important for newcomers to understand how to maximize these benefits while adhering to contribution rules to avoid penalties.

For comprehensive RRSP information, visit the CRA RRSP page.

When Do You Receive a T4RSP?

Your financial institution issues a T4RSP whenever money leaves your RRSP during the tax year. This includes:

• Cash withdrawals you initiated. These are typically withdrawals made for any purpose other than the Home Buyers' Plan (HBP) or Lifelong Learning Plan (LLP), and they are subject to immediate withholding tax. This could be for an emergency, an investment opportunity, or any other personal need, but it's important to remember the tax implications.
• Withdrawals under the Home Buyers' Plan (HBP). This program allows eligible first-time home buyers to withdraw funds from their RRSPs tax-free to purchase or build a home. While not immediately taxed, these withdrawals must be repaid to your RRSP over time.
• Withdrawals under the Lifelong Learning Plan (LLP). Similar to the HBP, the LLP allows you to withdraw funds from your RRSP to finance full-time education for yourself or your spouse or common-law partner. These withdrawals are also tax-free at the time of withdrawal but require repayment.
• Deregistered amounts (e.g., if your RRSP is deregistered due to exceeding contribution limits or other reasons). Deregistration can occur for various reasons, such as making excess contributions that are not removed in time, or if the plan no longer meets the CRA's registration requirements. These amounts are fully taxable in the year of deregistration.
• Amounts at death (the RRSP is deregistered when the annuitant passes away, unless transferred to a qualifying beneficiary). Upon the death of the RRSP holder (annuitant), the plan generally ceases to be an RRSP. The fair market value of the plan is considered income of the deceased, unless it is transferred to a qualifying beneficiary, such as a surviving spouse, common-law partner, or financially dependent child or grandchild.
• Conversion to RRIF — when your RRSP matures and converts to a Registered Retirement Income Fund at age 71. By the end of the year you turn 71, you must either convert your RRSP to a RRIF, purchase an annuity, or withdraw all funds. Most people choose to convert to a RRIF, which allows for continued tax-deferred growth but mandates minimum annual withdrawals starting the following year.

You'll receive the T4RSP by the end of February following the tax year in which the withdrawal occurred. This deadline is crucial because you need this slip to file your income tax return by the annual deadline, typically April 30th. If you made withdrawals from multiple institutions, you'll receive a T4RSP from each one. It's important to gather all your tax slips before you begin preparing your return to ensure all income and deductions are accurately reported.

Understanding the Boxes on Your T4RSP

The T4RSP has several boxes, each reporting a different type of income or information. Familiarizing yourself with these boxes will help you accurately report your RRSP withdrawals on your income tax return.

Box 16: Annuity Payments

This box shows payments received from an RRSP annuity. An RRSP annuity is a contract you purchase with your RRSP funds that provides you with a regular income stream, usually for life or a specified period. Most people don't have RRSP annuities — this is more common in older-style plans or for those who chose an annuity option at retirement instead of a RRIF. If you have an amount here, it's included in your income for the year, just like any other withdrawal.

Box 18: Refund of Premiums

This applies when an RRSP holder dies and the RRSP proceeds are paid to a qualified beneficiary (usually a spouse or common-law partner, or a financially dependent child or grandchild). The beneficiary reports this amount as income but may be able to transfer it to their own RRSP, RRIF, or annuity to defer the tax. This transfer is typically done by contributing the refund of premiums to their own registered plan and claiming an offsetting deduction. If the amount cannot be transferred (e.g., if the beneficiary is not qualified or chooses not to transfer), it is fully taxable in the beneficiary's hands.

Box 20: Other Income or Deductions

This catch-all box reports other amounts related to your RRSP, such as excess contributions refunded or other special situations. For instance, if you withdrew excess contributions from your RRSP, or if there was a transfer of funds due to a marriage breakdown to your spouse's RRSP, these might be reported here with specific codes in Box 28. It's less common for newcomers to encounter amounts in this box, but it's important to understand it exists for various unique scenarios.

Box 22: Income Tax Deducted

This is the withholding tax that your financial institution deducted from your withdrawal at source. When you make a regular withdrawal from your RRSP, your financial institution is legally required to withhold a portion of the amount and send it directly to the CRA. This is an advance payment towards your total tax liability. Withholding tax rates on RRSP withdrawals are:

• 10% on amounts up to $5,000
• 20% on amounts between $5,001 and $15,000
• 30% on amounts over $15,000

These rates apply to most of Canada. In Quebec, provincial withholding is separate and additional, meaning you might see a higher percentage withheld from your withdrawal if you reside in Quebec. The amount in Box 22 is a prepayment of tax — it's credited against your total tax owing when you file your return. The actual tax you owe on the withdrawal depends on your marginal tax rate for the year. This means that while 10%, 20%, or 30% is withheld, your final tax bill could be higher or lower depending on your total income from all sources in that tax year.

Box 24: Withdrawal Under HBP

If you withdrew from your RRSP under the Home Buyers' Plan, this box shows the amount. HBP withdrawals are not taxed at the time of withdrawal (no withholding tax) but must be repaid to your RRSP over 15 years. This program is designed to help first-time home buyers in Canada. To be eligible, you generally must be a first-time home buyer, which means you haven't owned a home in which you lived in the current year or any of the four preceding calendar years. If you don't repay the minimum annual amount, the shortfall is added to your taxable income for that year and you lose that portion of your RRSP contribution room. You can withdraw up to $60,000 under the