Using RRSP money for renovations

Question: I am 59 years old and retired. My husband and I have a comfortable living on the pensions we both currently receive, and do not anticipate any major changes in the near future. My question is this: Can I withdraw 10% of my RRSP assets (about $8,000) to use for home renovations, and if I do how much tax will I have to pay? My yearly pension income is only $12,000. My husband’s, of course, is much larger.

Gordon Pape answer: You can withdraw the money, which will then be taxed as income at your marginal rate. Given your other income, it appears you will be in the lowest tax bracket. A certain amount of the withdrawal will be withheld by the bank against taxes due. Except in Quebec, the withholding is 10% on withdrawals up to $5,000 and 20% on withdrawals of between $5,001 and $15,000. (Quebec withholding rates are 18% and 30% respectively). Of course, the amount withheld can be claimed on your return against taxes due.