Can you simplify RRSP, OAS, and Pension rules please? | RRSPs and RRIFs | Discussion forum

Re #1, you need to clarify, what pension are you talking about when you refer to "minimum pension"? (And what's it got to do with your RRSP?)

Re #2, as far as I know you can live anywhere and still receive pension payments, including QPP, you've qualified for.

You can get OAS and CPP if you reside abroad when you collect them, not GIS as have to be Cdn resident to get it.

These may be helpful, but i think it's only a start.

https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/non-residents-canada.html

https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/determining-your-residency-status.html

The latter page in particular makes it clear that holding Canadian bank accounts, drivers' licence, etc may be seen as signs that you are a Canadian resident.
Ultimately it will be up to CRA. If you and they differ in opinion as to whether you are a Canadian resident, you might have to take it to tax court. Generally, CRA rules.

I would not rely on the experience of Norman's neighbour to determine your situation. While it may well be true, it is not definitive; it is anecdotal. Others have had different experiences.
A key factor appears to be whether you have a home here that you could move back into readily. If you have one, you are considered a Canadian resident. I can verify from personal experience that I found this to be true.

I think, on further reflection, that Bill is correct about the OAS. It dose have a residency requirement in that you must have lived in Canada a certain number of years over age 18 in order to qualify for it. However, it makes no sense to me (and a lot of other people) for us to be giving OAS to people who don't live here as it is paid for out of the annual federal budget, not from a pension plan to which you have contributed, and it is related to the cost of living in Canada, not Barbados or Italy or wherever. I think it's likely that this practice will end at some point before you retire, and indeed OAS itself is likely to be overhauled completely. If I were planning for 20 -50 years hence, I would not include OAS as income I anticipated receiving. I probably won't be here in 20 years, so it's less of an issue, but, even so, I do not assume OAS will even be here for the rest of my life.

If you can tolerate a bit of unsolicited advice, I would suggest you assume you may have to work longer than you anticipate. Lots of things are going to change in the coming years and you will be adjusting your plans from time to time. Keep in mind ways you could earn additional income later if needed. Cultivate contacts in your industry with this in mind. Don't think in terms of finality at 55.

Here's the link re determining residency:
https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/determining-your-residency-status.html

Keeping a readily available home here is definitely key. But, as we know, having rules is just one thing. I happen to know of a few guys who are tax haven residents who regularly spend maybe 4 months of the year here, in their homes (likely owned by numbered companies) and CRA hasn't come knocking so I wonder about the level of enforcement, despite CRA's regular use of the media to soothe the plebes that they're cracking down on this stuff.

Bill said
Here's the link re determining residency:
https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/determining-your-residency-status.html

Keeping a readily available home here is definitely key. But, as we know, having rules is just one thing. I happen to know of a few guys who are tax haven residents who regularly spend maybe 4 months of the year here, in their homes (likely owned by numbered companies) and CRA hasn't come knocking …

Having a place to stay in Canada is just one of the factors examined.

Someone is not going to be found a resident of Canada just for keeping a "dumpy" $1 million house in Toronto that they and their family return to for a few months each year in the summer. For the rest of the year, they live in a $50 million house in California where the kids also go to school and the parents have substantial careers.

That's not very different from people in Canada having a place in Florida where they spend the winter months each year. That winter home and a US bank account to pay US property taxes and other sundry expenses won't make them US residents for tax purposes either.

As that CRA web page clearly says, "all the relevant facts" must be considered and not just residential ties:

To determine residence status, all of the relevant facts in each case must be considered, including residential ties with Canada and length of time, object, intent, and continuity while living inside and outside Canada.

Save2Retire@55, you modern parents! I didn't cost my parents a dime after age 18, I don't think they ever really knew exactly what it was I did to make my way in the world, and we both wouldn't have had it any other way.

@save2retire@55:

You are definitely not an idiot (or if you're an idiot, then I am too!). These are very intelligent questions. I was curious about #1 as well and could not find an answer after much research. They say you can go to your Service Canada account and get an estimate of your pension, but I was curious about what you asked which is if you are taking the pension at 65, and have only contributed, say $100 from a few paycheques, what is the minimum you will receive? They give a maximum and an average, but I couldn't find the minimum. I realize it also takes into account years of low income, but I'm talking about a very minimal contribution - only a few paycheques as you mention. Did you find this answer?

For #2, I found this interesting as well. I knew about the 6 month rule for residency and collecting GIS but the OAS and CPP I had heard conflicting information. Also, remember that for OHIP, there are a separate set of requirements (if you still want to keep that). I've listed them below FYI:

Away for more than seven months
If you plan to be outside Canada for more than seven months in any 12-month period you can keep your OHIP coverage for up to two years if you:

have a valid health card
make Ontario your primary home
will be in Ontario for at least 153 days a year in each of the two years immediately before you leave the country
Before you leave, take the following items to the nearest ServiceOntario centre to make sure your OHIP coverage stays active:

your health card
proof of residency (e.g. mortgage, lease or rental agreement, property tax bill, valid driver’s licence)

Save2Retire@55 said
Hello, I might sound an idiot but the more I read the more confused I get about the rules. Here are some questions:

1. Is the Minimum pension paid to anyone as long as they contributed to my RRSP payment during the years? Let's say someone comes to Canada and they are 57 years old. They work for 2 months. Contribute to pension twice and stop working. Will they get the Min pension payment?

2. I think we discussed this before but if I plan to retire somewhere cheaper (and warmer) than Canada. Will I still get pension payments? And I understand they cut a big chunk before when withdrawing RRSP, is it the same case when paying pension? (Some portion will be returned after Income Tax) The question is, does it matter if you are a resident of Canada or not for Tax purposes (Which I assume is staying in Canada for min 6 months) to receive the pension you contributed to for 25-35 years?
 

James said
@save2retire@55:

… I was curious about #1 as well and could not find an answer after much research. They say you can go to your Service Canada account and get an estimate of your pension, but I was curious about what you asked which is if you are taking the pension at 65, and have only contributed, say $100 from a few paycheques, what is the minimum you will receive? They give a maximum and an average, but I couldn't find the minimum. I realize it also takes into account years of low income, but I'm talking about a very minimal contribution - only a few paycheques as you mention. …
 

The minimum is likely $0.

Doug Runchey gives a more detailed six step calculation in How to calculate your CPP retirement pension.

The steps suggest that CPP is around 25% of some kind of average of one's pensionable earnings from age 18 to when you retire. If the average earnings works out to be $50/year, then one will get a $12.50/year CPP pension!

There is no reason for there to be a CPP minimum as it is based on your contributions, according to a formula. If you contributed very little, you will get very little.

There is a maximum, which is clearly stated and is related to the maximum pensionable earnings and related contributions, which is also clearly stated. It can be increased, however, if you delay CPP to age 70. There is also the Post Retirement Benefit which can be added on, for people who elect to take CPP at 65 but are still working and contributing up to age 70. Once you reach 70, you do not and cannot contribute to CPP.

The one you have to watch out for is the CPP survivor benefit. If you request a statement of contributions from CPP (which I recommend you do periodically), it will give you an estimate for survivor benefit. This amount is bogus and rarely if ever applies because the calculation is complex and pretty much guarantees that survivor won't get much. Survivors do not get any benefit from contributions made by spouse to CPP between 65 and 70 years.

If you have unresolved questions about CPP, then by al means phone CPP. I have found that they try their best to help and will stay on the phone with you for a long time if needed.