Maria, a 60-year-old Canadian resident, plans to withdraw $15,000 from her RRSP. Her provincial withholding tax rate is 5% for amounts between $5,001 and $15,000, and the federal rate is 10% for the same range. What is the total withholding tax that will be applied to this withdrawal?

Question: Maria, a 60-year-old Canadian resident, plans to withdraw $15,000 from her RRSP. Her provincial withholding tax rate is 5% for amounts between $5,001 and $15,000, and the federal rate is 10% for the same range. What is the total withholding tax that will be applied to this withdrawal?

Answer options:

• $1,500
• $750 ✅ $2,250
• $0

Correct answer: $2,250

Explanation: The total withholding tax is the sum of the federal and provincial withholding taxes. For a withdrawal of $15,000, the federal rate is 10% ($1,500) and the provincial rate is 5% ($750). The total withholding tax is $1,500 + $750 = $2,250. It's important to remember that this is withholding tax, not necessarily the final tax liability.