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Canadian tax rules ‘Put Pensioners at Risk’
Zone(s): Canada ¦ Sector(s): Tax, Pensions
Federal tax rules require those with tax-deferred savings to either purchase annuities or transfer their assets into RRIFs or similar vehicles. The Income Tax Act obliges RRIF holders to withdraw minimum annual amounts on the basis of an age-related formula. The amount to be withdrawn increases each year, until it reaches 20 percent.
As the Institute explains: “By forcing the drawdown of assets that have received tax-deferred treatment, these provisions accelerate or otherwise ensure steady receipt of government tax revenue that would otherwise only occur on the death of the account holder or his/her spouse, partner or beneficiary.”