Share this content

Lump sum withdrawal from Canadian RRSP

UK tax implications of lump sum withdrawal from Canadian Registered Retirement Savings Plan ('RRSP')

Hello, does anyone have experience of looking at the UK tax implications of a lump sum withdrawal from a Canadian RRSP? My client has, during the 2016/17 tax year, withdrawn the balance of her funds from her Canadian RRSP.  She is UK tax resident.  She suffered 25% WHT in Canada on the withdrawal of funds and transfer to the UK.  The HMRC manuals at "DT4605 Canada: Notes" explain that this lump sum withdrawal would not be taxable in the UK, and my research supports that but I'd appreciate the views of others.  I am aware that tax is paid in the UK on disposal of assets within the fund, and I'm aware that the 25% WHT cannot be set off against the gains on disposal of assets within the fund. 

many thanks


Please login or register to join the discussion.

By MJShone
06th Nov 2017 17:24

Try HMRC's Double Tax Relief Manual at DT4605:
Specifically the very last section in that para:

"Where a UK resident makes a lump sum withdrawal from an RRSP or an RRIF, Canada imposes a 25 per cent withholding tax. No tax credit relief is allowable in the United Kingdom in respect of the tax withheld, however, because the Canadian tax is imposed upon the lump sum withdrawal (which does not itself give rise to a tax charge in the United Kingdom), whereas any UK tax charge is on the disposal of assets held within the Plan or Fund to enable the lump sum to be withdrawn (and no tax is levied on the disposal of fund assets in Canada). The Elimination of Double Taxation Article (Article 21) obliges the United Kingdom to give credit for Canadian tax paid only against UK tax computed by reference to the same profits, income or chargeable gains by reference to which the Canadian tax is computed. Since no UK tax is computed by reference to the subject of Canadian tax (that is, the withdrawal), no tax credit relief is allowable. Similarly, where the disposal of fund assets to facilitate a withdrawal gives rise to a UK tax charge, no tax credit relief is allowable since the disposal does not attract a tax charge in Canada."

Thanks (1)
Share this content