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RRSP Withdrawals Not Pensions

Withdrawals from a registered retirement savings plan (RRSP) are not the same as a pension, says a Tax Court of Canada decision. The ruling arose from a case where an individual tried to claim RRSP withdrawals as a pension credit on their tax return. They argued that the withdrawals qualify for the pension credit because they are annuity payments and meet the definition of pension income under the Income Tax Act. The act says to qualify as an annuity, the payments must be payable on a periodic basis whether payable at intervals longer or shorter than a year and whether payable under a contract, will, or trust or otherwise. While the RRSP payments were recurring and met the definition requirements, the court rejected this argument. It said while the payments were regular, they were all completed under the individual's direction who could have directed that the entire RRSP fund be paid out in one lump sum.

Courtesy of Benefits and Pensions Monitor website News Alerts 

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