Tax-free withdrawal from my Self-Directed RRSP

The Income Tax Act stipulates that withdrawals of retirement funds must be included in a taxpayer's income, and the amounts withdrawn are subject to withholdings of 10 per cent to 30 per cent for income taxes, according to Howard Sone, Partner, Sone & Rovet in North York.

"Be careful of promoters who advertise -'Take advantage of your RRSP now - no tax to pay.' They will present a complicated financing scheme that involves using your self-directed RRSP funds to purchase shares of a private company. The funds used to purchase these shares are then loaned back to you at a low or no interest rate. However, there are no rules and regulations in the Income Tax Act that permit this or similar schemes. The amount withdrawn for such a purchase will be subject to income taxes by the taxpayer," cautions Sone.

Canada Revenue Agency has issued a warning to the public about these and other types of schemes and can be found under "Debunking Tax Myths" on the CRA website (

Sone warns taxpayers that, if it sounds too good to be true, it is too good to be true! So be cautious!
Courtesy of Institute of Chartered Accountants of Ontario.