# RRSP income



## curt00 (Apr 9, 2015)

Whenever I withdraw from my RRSP, the Canadian government treats that as income and will charge tax on it. If I move to Mexico, I will be withdrawing from my RRSP. Does the Mexican government charge income tax on it?


----------



## HolyMole (Jan 3, 2009)

curt00 said:


> Whenever I withdraw from my RRSP, the Canadian government treats that as income and will charge tax on it. If I move to Mexico, I will be withdrawing from my RRSP. Does the Mexican government charge income tax on it?


I stand to be corrected, but I believe Mexico would tax only income you received from a Mexican source.
But Canada will still tax you, even if you become a permanent resident of Mexico.


----------



## curt00 (Apr 9, 2015)

HolyMole said:


> I stand to be corrected, but I believe Mexico would tax only income you received from a Mexican source.
> But Canada will still tax you, even if you become a permanent resident of Mexico.


Thanks for your reply.

I understand and will have to live with the fact that I must pay tax to the Canadian government based on my RRSP income.

So, even though I withdraw that money from my RRSP, transfer it to a Mexican bank, withdraw it from the Mexican bank to pay for my living expenses, the Mexican government will not charge tax on it?

I would hate the idea of spending the time and money to move to Mexico only to find out that they recently changed their policy. If I have to pay Mexico's income tax, I cannot afford to live in Mexico.

How recent do you think this is? Are there any Canadians doing this currently in Mexico who can verify this?


----------



## Rod L. (Apr 5, 2015)

No, Mexican Govt. doesn't even need to know about it.


----------



## curt00 (Apr 9, 2015)

Rod L. said:


> No, Mexican Govt. doesn't even need to know about it.


Does anybody know of a tax accountant in Mexico who can verify this?

In Canada, we can contact the CRA and get answers to tax questions. What is Mexico's equivalent to CRA and has anybody contacted them about this?

Sorry for being so anal about this. This is critical as I do not want to spend the months and thousands of dollars it will take to move, only to find out later that I cannot afford to live in Mexico because they charge tax on my RRSP income.


----------



## RVGRINGO (May 16, 2007)

No need to worry, Curt. Mexico will not tax your funds from Canada. You have your answer.


----------



## sparks (Jun 17, 2007)

Don't transfer anything to a Mexican bank ..... transfer it to a Canadian Bank and use your ATM Card


----------



## curt00 (Apr 9, 2015)

sparks said:


> Don't transfer anything to a Mexican bank ..... transfer it to a Canadian Bank and use your ATM Card


Really? What happens if my rent is $1,500 a month? Will the ATM allow me to withdraw 18,000 MXN pesos? (I'm not even sure that a Canadian bank will allow me to withdraw that much.) Do most landlords take cash for rent?


----------



## maesonna (Jun 10, 2008)

The Mexican revenue service is Secretaria de Hacienda y Crédito Público (SHCP) and the department that deals with taxpayers is the Servicio de Administración Tribunal (SAT). They do answer taxpayers' questions (but you'll need to be able to communicate in Spanish or get a Spanish speaker to help you).

SAT has started keeping close watch on Mexican bank accounts, so if you transfer your funds into a Mexican bank you run the risk of triggering Mexican tax consequences.

ATM withdrawal limits are usually about 5000 pesos daily – sometimes less. Has anyone experienced a higher limit?


----------



## curt00 (Apr 9, 2015)

maesonna said:


> The Mexican revenue service is Secretaria de Hacienda y Crédito Público (SHCP) and the department that deals with taxpayers is the Servicio de Administración Tribunal (SAT). They do answer taxpayers' questions (but you'll need to be able to communicate in Spanish or get a Spanish speaker to help you).
> 
> SAT has started keeping close watch on Mexican bank accounts, so if you transfer your funds into a Mexican bank you run the risk of triggering Mexican tax consequences.
> 
> ATM withdrawal limits are usually about 5000 pesos daily – sometimes less. Has anyone experienced a higher limit?


Thanks for your suggestion. I had recently found out about SAT and sent an e-mail to [email protected], asking my question. I sent it in both Spanish (translated from Google Translate) and English, but I have not heard back.

So, are you saying that if I withdraw money from my RRSP and then transfer it to a Mexican bank, then SAT deems that as income and charges tax on it? If so, that's a huge deterrent to move to Mexico.

According to Individual income tax rates table | KPMG | GLOBAL , top marginal income tax rate in Mexico is 30% but the problem is that it kicks in at 32,737 MXN monthly, which is only 2,702 CAD monthly. This is 32,429 CAD yearly. The effective tax rate in Canada for 32,429 CAD is approximately 10%. 30% is a LOT of tax.


----------



## maesonna (Jun 10, 2008)

I'm not saying that you necessarily will be charged tax on money you have in a Mexican bank, but I can't promise that you won't.

Organizations in Mexico often tend not to be good at communicating by email. Face to face is best. I don't know how the SAT one-to-one chat facility is, but it might be worth a try. I looked for a help line for advice by phone, but a brief look at the SAT website didn't show one. Maybe a more careful look will turn one up.

People who go in person to SAT offices have reported finding the staff there generally helpful. Are you planning any scouting trip to Mexico in the future?


----------



## sparks (Jun 17, 2007)

curt00 said:


> Really? What happens if my rent is $1,500 a month? Will the ATM allow me to withdraw 18,000 MXN pesos? (I'm not even sure that a Canadian bank will allow me to withdraw that much.) Do most landlords take cash for rent?


Man you are out of touch ..... $1500US rent and you should not even be asking us Peons for advise. You can rent a castle for 5000-6000 pesos. What the heck are you going to need ???

Landlords prefer cash or direct deposit to their bank


----------



## sparks (Jun 17, 2007)

curt00 said:


> Thanks for your suggestion. I had recently found out about SAT and sent an e-mail to [email protected], asking my question. I sent it in both Spanish (translated from Google Translate) and English, but I have not heard back.
> 
> So, are you saying that if I withdraw money from my RRSP and then transfer it to a Mexican bank, then SAT deems that as income and charges tax on it? If so, that's a huge deterrent to move to Mexico.


Forget the TAX BS ...... pay your tax in Canada and forget it


----------



## sparks (Jun 17, 2007)

maesonna said:


> I'm not saying that you necessarily will be charged tax on money you have in a Mexican bank, but I can't promise that you won't.


You can't get taxed on money "you have in your account" ..... you can get taxed on CASH deposits. Bank transfers are not CASH deposits


----------



## Isla Verde (Oct 19, 2011)

Does anyone know what cash-deposit limit triggers the interest of SAT in the money we have in our Mexican bank accounts?


----------



## sparks (Jun 17, 2007)

Isla Verde said:


> Does anyone know what cash-deposit limit triggers the interest of SAT in the money we have in our Mexican bank accounts?


On another board a person transferred a years worth of retirement income to a bank in Mexico and had to pay taxes and had to hire a lawyer to prove it was not NEW income.

Check into InterCam, other transfer methods ....... or stick with ATM's


----------



## RVGRINGO (May 16, 2007)

Curt,
You are getting some strange and conflicting advice. For example: You may withdraw pesos up to your daily dollar limit established by you and your home bank. Generally, banks issue a debit card with around a $500 default limit. Ours did, but we simply requested that they raise the limit to $1000 USD, in our case. That allowed us to withdraw $12-15,000 pesos per day, depending upon exchange rate. Some machines would dispense that in one transaction, while others would not. One learns which and where. It 13 years living in Chapala, we never had a Mexican bank account and noted that they often had long lines, strange rules, high fees and little or no protection comparable to the US and Canada. Mexico is still pretty much a cash society and we suggest that you not try to use credit or debit cards for purchases, as receipts often print the entire number and credit card fraud is rampant. So, use only a debit card and buy with cash. Occasional large purchases can be handled in other ways for buying cars, homes, etc. Keep it simple and use your home bank‘s online services for record keeping and bill paying at home, taxes, etc.


----------



## ojosazules11 (Nov 3, 2013)

curt00 said:


> Whenever I withdraw from my RRSP, the Canadian government treats that as income and will charge tax on it. If I move to Mexico, I will be withdrawing from my RRSP. Does the Mexican government charge income tax on it?


1. The taxes the Canadian government charges on RRSPs is a deferred tax. The income was earned in the past, but if invested in an RRSP that income was not taxed at the time it was earned. So the government is collecting the tax at a later date when withdrawn from the RRSP (hopefully when you are in a lower tax bracket!). 

2. The Mexican government will not tax you for income earned in Canada in the past. 

3. The tax on *deposits made in CASH or Cashier's Cheques* to a Mexican bank account is 3% on the amount which exceeds MXN$15,000 per calendar month. 
So if you deposit a total of MXN$18,000 *cash* to a Mexican bank account in any given month, you would have to pay 3% only on the part which exceeds $15,000, i.e. taxed on MXN$3000 (tax pd would be MXN$90). 

Here is a link to the Mexican Gov't website with FAQs on this subject (in Spanish, though): Impuesto a los Depósitos en Efectivo (IDE)

4.* Electronic transfers, including bank to bank, from Canada to Mexico are NOT TAXED in this way. * I have transferred several larger amounts in 2013 and 2014, e.g. MXN$50,000 or more, and there was never any kind of tax or deduction on this transfer in Mexico. I mostly used XE Currency for these larger transactions. There is a lot of paperwork involved, though, to get this initially set up with XE or CanadianForex, as there are regulations to ensure there is no fraudulent activity going on. I had to send XE copies of all sorts of personal documents, get a guarantor saying I am who I say I am, etc. Then after one year, they wanted me to resubmit all the same documents. I no longer need to transfer these amounts (it was for a land purchase), so I just let that lapse, and now we either use ATMs or MoneyGram (Moneygram can be sent in Canada from any Canada Post outlet, and collected in Mexico at Elektra or Banco Azteca - it's nearly instantaneous). MoneyGram is cheaper than Western Union.

So curt, to reiterate, based on both my first-hand experience and what I have read on Mexican government websites, you are only going to have to pay a tax if you are making cash deposits to your Mexican bank account which exceed MXN$15,000 per month (and only on the amount which exceeds $15,000). Electronic transfers are not subject to this tax. 

If you use ATMs or MoneyGram to get cash, just avoid depositing large monthly amounts into your Mexican bank account (if you decide to have one - as RV mentions, some people choose not to have a Mexican account and only use ATMs).

And just to clarify, there is NOT a tax on the foreign cash remittances received, e.g. through MoneyGram. This is also from plenty of up-to-date first hand experience.


----------



## ojosazules11 (Nov 3, 2013)

sparks said:


> Man you are out of touch ..... $1500US rent and you should not even be asking us Peons for advise. You can rent a castle for 5000-6000 pesos. What the heck are you going to need ???


I think that the price of rent depends on the part of the country. MXN $5000-6000 right in Tepoztlan will get you a nice 2 BR apartment with a view, but hardly a castle. I know because some friends of mine - Mexican - have such an apartment for rent right now for $5,500 - unfurnished, nice, but not luxurious. Small, lovely garden is shared with owners. No swimming pool. Fantastic view, though, with electricity and water included. You can get more for your money if you go to more outlying areas.


----------



## TravelLover (Apr 12, 2013)

We LOVED the palace we rented!


----------



## curt00 (Apr 9, 2015)

maesonna said:


> I'm not saying that you necessarily will be charged tax on money you have in a Mexican bank, but I can't promise that you won't.
> 
> Organizations in Mexico often tend not to be good at communicating by email. Face to face is best. I don't know how the SAT one-to-one chat facility is, but it might be worth a try. I looked for a help line for advice by phone, but a brief look at the SAT website didn't show one. Maybe a more careful look will turn one up.
> 
> People who go in person to SAT offices have reported finding the staff there generally helpful. Are you planning any scouting trip to Mexico in the future?


Thanks for your suggestion. According to Chat uno a uno , the first step is to login at https://www.siat.sat.gob.mx/PTSC/ , but unfortunately, I cannot find out how to register first. Trying to figure out how to use that site is a lot of work if one cannot read Spanish. Maybe I'm kidding myself into thinking that I can move to Mexico, when I cannot read or write Spanish.

Likely I will make another scouting trip, but don't know exactly when yet.




sparks said:


> Man you are out of touch ..... $1500US rent and you should not even be asking us Peons for advise. You can rent a castle for 5000-6000 pesos. What the heck are you going to need ???
> 
> Landlords prefer cash or direct deposit to their bank


I was referring to $1,500 CAD for a 2/2 in Playa Del Carmen, which is approximately $1,200 USD. PDC seems expensive, I know.

RVGRINGO and ojosazules11:

Thanks for your input! That's good to hear.


----------

