Delean: Questions about returning to Quebec, when to withdraw the RRSP

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The withdrawal of funds from a Registered Retirement Savings Plan (RRSP) and the tax implications of a return to Quebec from the United States were some of the issues raised in recent letters from readers. This is what they wanted to know.

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Q: I retired last May and will turn 67 in December. I receive a pension from work of approximately $ 13,000 a year; my wife continues to work. I have not yet applied for the Old Age Security or the Quebec Pension Plan, intending to wait until age 70 (to receive the enhanced amounts). I have $ 76,000 in my TFSA and savings that I can dip into, but I think the best strategy for the next few years might be to reduce my RRSP (currently worth $ 330,000) by roughly $ 32,000 a year, so my (subject to taxes) the income would be around $ 45,000. What you think?

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TO: I think it is an excellent plan. The $ 45,000 mark is where the provincial tax rate increases to 20 percent from 15 (the federal rate jumps to 20.5 percent from 15 to $ 49,000), so that is where the high tax rates borne by the Quebecers are really starting to affect. RRSPs are basically a big set of savings that are taxed on leaving, so you want them to come out as tax-efficient as possible, and that doesn’t necessarily mean waiting until age 71 when you’re required to. . When your wife stops working, you may consider dividing pension income (including QPP) as a way to minimize household taxes. Maximizing the TFSA, as you are doing, will also provide you with a financial cushion in retirement.

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Q: I am 72 years old, I am Canadian with a green card who has been living in the United States and I want to return to Quebec next year. What notifications, if any, do I have to give to the tax departments, or do I just indicate on my tax returns that I am back? I receive (American) Social Security in addition to my Canadian pensions and I also have a 401k (the American equivalent of an RRSP). How is that handled when it comes to taxes in Canada?

TO: It may be a useful exercise, before you move, to include some of your recent tax information on your federal and Quebec tax returns, so that you have a clear idea of ​​the financial implications. You do not need to notify the revenue departments until your tax filing for the year of your return, but all your sources of income in Canada and the US must be notified of the change in your residence status. A 401k owned by a Canadian resident is considered a pension plan, so the income that accrues within it is not taxable, but outlays are. US Social Security benefits are taxable here, but are eligible for a 15 percent deduction on the Canadian return under the Canada-US tax treaty. Old Age Security and Plan of Quebec Pensions is taxable income here. For the year of your return, you will be assessed worldwide income tax from the date you resumed your residence here.

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Q: I have recently noticed several real estate listings for multi-unit buildings that were “undivided.” What does that mean?

TO: It means that the property is considered a single entity, even if the units are separate, and buyers actually acquire a fraction of the total (usually determined by the size of their unit) rather than an actual space of their own. Due to the particularities of the arrangement, the Chambre des notaires du Québec recommends that there be a written agreement between the occupants specifying the terms of their co-ownership so that there are no misunderstandings about, for example, renovations, resale or shared rates. On its website, the Chamber also points out that if, for example, one of the three co-owners of a building does not meet their share of the tax bill, the others will have to cover it. Insurance options can also be limited, as relatively few companies offer coverage.

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Q: I have some US stocks that I have owned for a long time. What kind of exchange do I use for tax reporting purposes when I sell them?

TO: The first stop is the Bank of Canada website, where you look up the average annual exchange rate for the year of acquisition. If you can’t find it there, the Revenue Agency of Canada will also accept the average rate for that year calculated by Bloomberg LP, Thomson Reuters, or OANDA Corp.

The Montreal Gazette invites readers to ask questions about tax, investment and personal finance matters. If you have a query that you would like to address, please email it to Paul Delean at [email protected]