Do I Tithe on RRSP Withdrawals?

If you tithe on gross income, the answer is yes - you tithe on RRSP withdrawals at the time you receive them, because that is when the money becomes income to your household.

If you tithe on net income, the practical call is to tithe on the portion that represents new income to you - which, in most cases, is most of the withdrawal, since RRSP withdrawals are taxed as ordinary income in Canada.

If you already tithed on the dollars before they went into the RRSP years ago, you are in trickier territory. Many thoughtful Christian financial advisors say once is enough on those original dollars. Others argue that growth earned inside the RRSP is new income and should be treated as such. Neither position is obviously wrong. The question worth sitting with is: what principle are you applying, and are you applying it consistently - or are you applying whichever calculation gives you the lower number?

How RRSP Withdrawals Are Taxed in Canada

Before the theological question, it helps to understand the mechanics.

When you withdraw money from your RRSP, the full amount is added to your taxable income for that year. Your financial institution is required to withhold tax at source: 10% on withdrawals up to $5,000, 20% on withdrawals between $5,001 and $15,000, and 30% on withdrawals above $15,000 (federal withholding rates; Quebec has different rules). The withheld amount is a prepayment of the tax you will owe - you reconcile the full picture when you file your T1 return.

This matters for the tithing question because it clarifies what kind of money an RRSP withdrawal is: it is taxable income, treated by CRA the same way employment income is treated. The RRSP deferred the tax; it did not eliminate it. When you withdraw, the income becomes real in the eyes of both the government and your household budget.

The Double-Tithe Worry

This is the objection I hear most often: "I already tithed on my paycheque when I contributed to the RRSP years ago. If I tithe again on the withdrawal, I'm paying twice."

It is a reasonable concern and I don't want to dismiss it. But I think it often involves a quiet accounting error.

When you earned $80,000 in salary and contributed $10,000 to your RRSP, you received a tax deduction - meaning the government essentially gave you back the taxes you would have paid on that $10,000. So while it is true you may have tithed on the gross paycheque before the RRSP contribution, the government refunded a portion of those earnings through the deduction. The dollars that went into the RRSP were partially subsidised by a tax deferral. Tithing on the withdrawal is, in part, tithing on income you never fully accounted for the first time.

That argument does not resolve cleanly for everyone, and I acknowledge that. If you contributed to your RRSP from after-tax dollars and never claimed the deduction, the double-tithe concern carries more weight. But for most Canadians who have used RRSP deductions over the years, the framing of "I already paid" is more complicated than it appears.

The Retirement Reframe

Here is the more clarifying question: what is your household income in retirement?

If you are drawing $60,000 per year from your RRSP to live on - paying rent or the last of your mortgage, buying groceries, covering utilities - that $60,000 is your income for the year. It is what you have to live on. Tithing on it is not double-paying. It is giving the same proportion of your income to God that you have given every other year of your adult life, in the season you are in.

The discipline of first-fruits giving - giving off the top before you know what you have left - applies to retirement income just as it applied to employment income. The source changed. The principle did not.

For most men approaching retirement, the most consistent thing to do is continue their established practice. If you tithed on gross income during your working years, tithe on your RRSP withdrawal at the time you receive it. If you tithed on net income, tithe on the after-tax amount you actually keep. Maintain the method you have always used, applied to the income you now have.

What About Investment Growth Inside the RRSP?

An RRSP can grow substantially through decades of compounding. A man who contributed $200,000 over his career might withdraw $450,000. The $250,000 of growth is unambiguously new income - he never earned it on a paycheque, never tithed on it, and the government taxes it fully on withdrawal. On that growth, the double-tithe concern does not apply at all.

This is one reason some Christian advisors argue that tithing on the full RRSP withdrawal is the most straightforward approach: it covers the growth without requiring you to reconstruct decades of contribution and deduction history to determine what you "already tithed on."

Simple is not always theologically correct, but in this case, simplicity and consistency point in the same direction.

A Practical Framework

If you are navigating this question - whether in retirement now or planning ahead - here is a workable framework:

Decide your tithe base now, before you start withdrawing. Is it the gross withdrawal (the full amount before withholding)? The net amount after withholding? Either is defensible. What matters is that you decide on purpose and apply it consistently.

Give at the time you receive the income. When the RRSP withdrawal lands in your account, transfer the tithe. Do not accumulate withdrawals and give at year end. The practice is meant to be regular.

If you are genuinely uncertain, talk to a pastor or a Christian financial advisor who can look at your full picture. Tithing questions are ultimately pastoral questions that happen to involve tax mechanics. Both lenses matter.

For a full treatment of the biblical case for tithing and how to handle gross vs. net income, the tithing guide for Canadian Christians covers it in depth. For the specific gross vs. net question, should you tithe on gross or net income? works through the three biblical principles that guide the decision.

Giving is not an accounting problem - but it is worth being consistent with yourself so God is not the one absorbing your hesitation.

This article is for educational purposes only and does not constitute financial or tax advice. Consult a qualified Canadian financial professional or tax advisor regarding your specific situation.