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What is a RRIF?

A RRIF is an investment plan, established in accordance with Government of Canada requirements, into which you can transfer registered funds (usually your RSP) without tax liability for the purpose of establishing an income stream for life.


With a RRIF, starting the year after the plan is opened, an annual minimum payment must be taken each year and is considered taxable income. The year the plan is opened a payment does not have to be made, but you are free to withdraw any amount (however, in this case, withholding tax will apply to the full withdrawal amount).


The annual minimum payment that must be taken from a RRIF each year is determined by the Income Tax Act and is based on age. Your own age or your spouse's age can be used to calculate the annual minimum payment. Using the younger of the ages will result in a lower annual minimum payment. This means less money will have to be withdrawn and taken into taxable income for the year and more remains in the RRIF earning tax-sheltered income.




How are payments taxed?

Not unlinke your RSPs, RRIFs grow tax-deferred. The only real difference is that you'll have to withdraw at least the annual minimum payment required under the Income Tax Act, which is taxable as income.

All payments from a RRIF must be declared as income for the year they are received. Tax must be withheld on amounts withdrawn in excess of the annual minimum amount that is required to be paid under the Income Tax Act (Canada). If you receive RRIF payments in scheduled installments, we will compute withholding tax on each individual RRIF installment payment based on the total sum of the scheduled installment payments for a calendar year and not on each individual payment. We will use the following rates to compute the withholding tax:

in excess

(except Quebec)
Up to $5,000



$5,001 - $15,000



More than $15,000



You can request to have a specific amount of tax withheld (subject to the legislated minimum). By having more tax withheld from your payments, you may avoid any last minute panic when you file your personal income tax return and find you have an amount owing.

Heritage Savings & Credit Union Inc.
318 Merritt Ave
Chatham Ontario
N7M 3G1
tel: 519.351.0600
fax: 519.351.0660

Copyright © 2009 Heritage Savings Credit Union. All rights reserved.