RRSP accounts seem great when you make a deposit and taxes are deducted from your income to match your contribution. The problem is, when you withdraw funds, the amounted is added to your total income for the year and taxed accordingly. In anticipation of taxes owed, financial institutions will often hold onto some of the money withdrawn and send it directly to the CRA. Keep in mind however, that the money withheld may not be enough and you can be fined a hefty amount for lack of payment.

“The truth is, it’s actually quite simple: any funds withdrawn from your RRSP (or its successor, a RRIF) are included in your income.”

Read more: https://business.financialpost.com/personal-finance/taxes/running-afoul-of-the-cra-on-rrsp-withdrawals-can-be-a-costly-mistake