Withdrawn RRSP funds that are genuinely the applicant's own and placed at risk in the business can be considered, but the withdrawal, tax treatment, and transfer into the business all need to be properly documented.
Document the withdrawal like any other source of funds
Treat the RRSP withdrawal the same as any other funding source: trace it, document the tax consequences, and confirm it actually reached the business as capital.
Confirm ownership of the savings, lawful accumulation, withdrawal terms, withholding, and every transfer into the enterprise. E-2 requires treaty nationality for both investor and enterprise—Canadian citizenship qualifies, Canadian permanent residence does not—and at least 50 percent treaty-national ownership. The investor must develop and direct the enterprise, ordinarily shown through at least 50 percent ownership or operational control. Investment substantiality is measured proportionally against the business cost, with no fixed minimum; capital must be irrevocably committed and at risk, although the applicant may still be in the process of investing. A new enterprise can qualify if it will be real and active, and it must not be marginal, generally showing capacity beyond a minimal living or significant economic impact within five years after normal business activity begins. The common error is treating an RRSP balance as committed business capital.
Hypothetical example: A Canadian citizen near Tecumseh withdraws retirement savings to acquire a pet-grooming franchise and transfers only a refundable reservation fee. The applicant obtains account history, withdrawal and tax records, bank tracing, franchise terms, total startup cost, ownership documents, and a realistic operating projection. Counsel examines whether the reservation is truly at risk and whether remaining commitments make the investment proportionally substantial. Until those facts align, the retirement balance is not described as the qualifying investment.