Lump-sum payments

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).

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.

Note

If you are filing amended T4A slips or are filing late, 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.

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 his or her Form TD1, Personal Tax Credits Return. This does not apply to lump-sum payments made to non-residents. 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.

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.

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