Canadian Registered Retirement Savings Plan (RRSP)

Can I transfer my Canadian Registered Retirement Savings Plan (RRSP) to New Zealand

At least once a year I get asked if an RRSP can be transferred to a New Zealand superannuation scheme. The short answer is no, as the rules of RRSPs do not permit rollovers into foreign superannuation schemes. The answer below applies equally to RRSPs and RRIFs (Registered Retirement Income Funds).

What is the alternative to transferring to New Zealand?

It is possible to transfer between RRSPs, but if accessing the fund is what you want, then you will need to make a withdrawal.  

What is the Canadian tax treatment of a withdrawal?

A withdrawal from your RRSP will be a Canadian taxable event and, when paid to a non-resident of Canada, the tax rate applicable is 25%. This is a final tax, so you do not need to complete a Canadian tax return to declare it.

Although under the terms of the Canadian/New Zealand double taxation agreement the maximum Canadian tax to be applied is stated to be 15%, this only applies to periodic payments. A single lump sum withdrawal is not a periodic payment.

What is the New Zealand tax treatment of a withdrawal?

A withdrawal from an RRSP will be a lump sum withdrawal from a foreign superannuation scheme taxable under New Zealand tax rules. This will require a calculation of your notional taxable income under either the Schedule Method or the Formula Method. Such calculations are often straightforward, but for a small number of individuals they can be complex.  

The Canadian tax deducted from the RRSP on withdrawal may be given as a credit in New Zealand in part or in full depending upon a number of factors.