Why did my RRSP withdrawal create such a big tax bill?

Withholding tax hides the real cost.

Is this you?

I withdrew money from my RRSP
Tax was withheld by the bank
I still owed tax at filing

"The tax the bank withheld covers everything."

Banks only withhold 10-20% by law. If your marginal tax rate is 40%+, you are effectively borrowing the difference from the CRA - and paying it back in April.

Why guessing is risky

Withdrawals stack on top of other income
Higher marginal rates apply unexpectedly
OAS and credits may also be affected

Safe to ignore if

Total income remained in a low tax bracket
Withdrawals were small and planned

Stop and check if

Large or multiple RRSP withdrawals occurred
Other income sources existed

Resolve the doubt

Check my RRSP withdrawal impact (2 minutes)

We'll tell you if this needs reporting and what to do next.

"Most people learn how timing withdrawals avoids future tax shocks."