Donating RRSP/RRIF while alive

Canadian tax policies that allow Register Retirement Savings Plans and Registered Retirement Investment Funds (RRSPs and RRIFs) have led many of us to shield significant amounts of money from tax for use in retirement.

You can donate all or part of an RRSP or an RRIF to a charity like Mill Woods United Church at any time. You can also donate them as a bequest via your last will and testament.

You might want to donate part of your RRSP/RRIF while alive and use the tax credit to reduce tax owing. This option usually applies to those who are not contributing to an RRSP. The inter vivos (in life) contributions from an RRSP or RRIF account will allow the donor to claim a donation tax credit (in Alberta 25% on first $200 and 50% on remaining contribution). This credit will exceed the tax imposed on the RRSP withdrawal.

Making an inter vivos donation from an RRSP or RRIF is an important estate planning tool for individuals who are likely to have significant unused RRSP/RRIF assets upon death. As with all significant gifts to charity, careful planning is required to realize the maximum impact of the donation. Donors should seek independent accounting advice when considering a gift funded from RRSP/RRIF assets.

It may be possible to avoid having tax withheld from the withdrawal from an RRSP/RRIF by the financial institution by filing a Form T1213, “Request to Reduce Tax Deductions at Source” with the appropriate taxpayer services regional correspondence centre. It would be prudent to include with the T1213 some form of documentation to corroborate the intention to make a gift to a registered charity from the withdrawal. This could be a signed pledge agreement, a draft gift agreement, a comfort letter from the registered charity confirming the intended gift.

Illustration of tax implications of RRSP/RRIF gift in life

Taxable Income $60,000 $150,000
RRSP/RRIF $10,000 $20,000
Withholding Tax $0 $0
Marginal Tax Rate 30.5% 41%
Taxes Paid $3050 8200
Value of donation tax receipt $4950 $9950
Net tax credit available after tax $1900 $1750

* The above example is for Alberta, and a T1213 was used to reduce withholding tax.

How to do this:

  1. Consult your investment advisor.
  2. Complete Form T1213 and give it to your institution if you don’t want to have withholding tax.
  3. Have your institution transfer proceeds to Mill Woods United.


  1. Up to 75% of a taxpayer’s net income can be claimed as donations, except in the year of death or the year preceding death, when 100% of net income can be claimed as donations. 
  2. The tax owing in the year of donation cannot be reduced below $0.00.