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Amount owed for Taxes against RRSP withdrawal

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  • Amount owed for Taxes against RRSP withdrawal

    Morning All,

    Early 2015, i withdrew about 45k from an RRSP (pre seperation) and we used these funds to manage debt, travel etc. Seperated May 1st 2015. My ex has agreed to pay her share of the tax burden due to the withdrawal.

    My question is how I calculate this. My approach was to complete my taxes without the T4RSP included... record that number (a) and then add the T4RSP and record that number (b). Her amount owing me would be the difference between (a) and (b) divided by 2.

    For example, if (a) was a positive return of $2,000 and (b) was a negative owing at $4,000 the difference would be $6,000 divided by two resulting in her paying me $3,000.

    Any fault in this logic?

    thanks kindly.

  • #2
    I don't see any fault - that's what I'd do.

    The only potentially arguable point here is
    whether the withdrawn amount should be placed 'on top of' the other income i.e. it is taxed at the highest marginal rate,
    whether it should be placed 'on the bottom' of the other income i.e. it is taxed at the lowest marginal rate (which is obviously not correct)
    something in the middle i.e. it is taxed at the average tax rate.

    To me clearly this income is 'on top' of the other income i.e. there SHOULD be no argument. But they can always try.
    Last edited by dinkyface; 05-24-2016, 11:45 AM.


    • #3
      Keep in mind that the RRSP withdrawal would have a withholding tax of 30% so with the 45,000 withdrawal would be taxes already withheld of 13,500. However the tax burden on the RRSP withdrawal will be higher as you pay at your marginal rate. I don't know how much you earn but the top marginal rate is around 45%. Most income earners will fall into a marginal tax bracket between 30% and 40% so that would be the percentage you owe in tax on the RRSP withdrawal.


      • #4
        Does anyone know if you forgot to include this detail in your financials during a divorce, are you unable to come back later and try and make your ex pay? Just curious. My husband is in this situation but I just tell him to consider it a yearly payment for not having to deal with his ex every day.


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