What to do with RRSP? Need advice
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Posted on: 12-11-11 20:14:42
What we (at least I) don't know is KumarM's age.
He might already be at the point where mandatory minimum withdrawals are required, or he might be getting close to it, which complicates the matter quite a lot.
Other than that, what TK, dimple2001 and ashedfc are talking about are different things and all of them are right.
From what I understood, TK is assuming that the RRSP is earning 3%, which would mean GICs or a conservative bond fund, etc.
dimple2001 points out that this assumption may not be correct.
If KumarM's RRSP is generating 7% vs. 3% that may have a significant difference on the decision to keep or withdraw.
ashedfc is also correct that inside an RRSP, the type of return doesn't matter.
Last note regarding returns - do not compare the nominal returns in India (probably north of 10%) with the nominal returns in Canada (around 3%) for the same risk type of investments.
What matters is the real RoR, adjusting for inflation and currency effects.
Becoming a non resident for tax purposes, while possible, is not as easy as it sounds.
There are many factors that can bring you into the net of CRA from tax residency purposes.
Refer:
http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html
and:
http://www.cra-arc.gc.ca/E/pub/tp/it221r3-consolid/README.html
One final note : if you do become a non resident, you cannot continue trading using a Canadian brokerage account.
It might be better to move out of volatile stocks, bonds, etc. and revert to GICs, managed mutual funds, etc.
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
Quote:
Originally posted by pratickm
What about the tax impact in India?
This income will also get added and taxed by India, no?
Is it true that foreign income is also taxed in India?
Quote:I have no idea, maybe someone else can clarify this.
Originally posted by web2000
Is it true that foreign income is also taxed in India?
I'd be very surprised if such a loophole exists, esp. since no tax treaty exists between India and Canada.
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
Quote:
Originally posted by pratickm
Quote:I have no idea, maybe someone else can clarify this.
Originally posted by web2000
Is it true that foreign income is also taxed in India?
I'd be very surprised if such a loophole exists, esp. since no tax treaty exists between India and Canada.
One more confusion you created. Are you talking about DTAA between India and Canada?
Quote:
Originally posted by ashedfc
2. Tax to Canada (on Canadian income & Indian income.. as Canada goes by world income)..
-- Canada does not go by "world income". Tax is deducted when you collapse (or break) your RRSP and withdraw money not because its is an investment income (it is not purely an investment) but because it is a tax deferred investment. Therefore when you withdraw money, the tax deferral ends and you end up in paying taxes.
Quote:No, I was talking about the social security agreement for pension income, similar to how Canada has with the US.
Originally posted by web2000
One more confusion you created. Are you talking about DTAA between India and Canada?
http://www.servicecanada.gc.ca/eng/isp/pub/nontax.shtml
Quote:No, individual will not have to pay Canadian income taxes any more since he/she would have severed all ties with Canada.
Originally posted by ashedfc
WOW, Does that mean "If a Person, canadian citizen moves to India & declares himself a non-resident; will have to pay both
1. Tax to India (on Indian income & Canadian investment income)
2. Tax to Canada (on Canadian income & Indian income.. as Canada goes by world income)..
The part I don't know is how India will treat the RRSP withdrawals if they are made years after the person has become a full time Indian resident.
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
Let us say I withdraw $10000 every year from RRSP and have no income from any other sources. At the end of the year I will have no tax to pay in Canada (Since basic slab is > 10000). This money will be transferred to India to my bank account.
The point here which is not clear is that if I have to pay tax in India or not. As per my understanding tax in India is only on what I earned in India. Can anybody clarify??
