Retiring allowances are treated as lump-sum payments. You have to deduct income tax from a retiring allowance unless it is paid directly into a registered retirement savings plan (RRSP) or a registered pension plan (RPP). Note that retiring allowances must be taxed even if a recipient's total earnings received or receivable during the calendar year, including the lump-sum payment, are less than the total claim amount on his or her Form TD1, Personal Tax Credits Return.
Do not report eligible and non-eligible retiring allowance amounts (including those amounts paid to Indians) on a T4A slip. Instead, report these types of income on a T4 slip. For more information on retiring allowances, see Guide RC4120, Employers' Guide – Filing the T4 Slip and Summary.
The T4A slip is still used to report eligible and non-eligible retiring allowance amounts (including those amounts paid to Indians) paid in 2009 and prior years if you are filing amended T4A slips or are filing late.
You have to deduct income tax from lump-sum payments that are:
- from a registered retirement savings plan (RRSP) or a plan referred to in subsection 146(12) of the Income Tax Act as an amended plan;
- from a registered pension plan (RPP);
- from a deferred profit-sharing plan (DPSP);
- more than the minimum amount you have to pay to an annuitant under a registered retirement income fund (RRIF); or
- from a retirement compensation arrangement. Report these payments in box 16, "Distributions," on a T4A-RCA, Statement of Distributions from a Retirement Compensation Arrangement (RCA).
If you pay a lump-sum payment (such as a refund of premiums) to a deceased annuitant's spouse or common-law partner, do not deduct income tax.
Do not deduct income tax from a lump-sum payment if a recipient's total earnings received or receivable during the calendar year, including the lump sum payment, are less than the "claim amount" on the employee's Form TD1, Personal Tax Credits Return. This does not apply to lump-sum payments paid to non-residents, or retiring allowances.
Certain qualifying retroactive lump-sum payments are eligible for a special tax calculation.
For all other lump-sum payments, deduct income tax using the withholding rates for lump-sum payments.
Report certain lump-sum payments on a T4A, Statement of Pension, Retirement, Annuity, and Other Income.
- Retiring allowances
- Qualifying retroactive lump-sum payments
- Withholding rates for lump-sum payments
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