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Line 130 - Retiring allowance (severance pay)

A retiring allowance is an amount you receive on or after retirement from an office or employment in recognition of long service. You may also receive this amount if you lose your office or employment, whether you are dismissed or resign.

It includes payment for unused sick leave and amounts you receive for loss of office or employment, whether as a payment of damages or a payment under an order or judgment of a tribunal.

It does not include accumulated vacation leave credit or income from a retirement compensation arrangement.

A retiring allowance may be made in lump-sum payments, but you must include them in income when you receive them.

Generally, the amounts should be shown on these slips:

  • T4A, Statement of Pension, Retirement, Annuity and Other Income

  • T3, Statement of Trust Income Allocations and Designations

If your retiring allowance is shown on a T3, details will be shown in box 47 and in the footnotes area of the slip.

You may be able to contribute (transfer directly or indirectly) part or all of your retiring allowances to your registered retirement savings plan (RRSP) or registered pension plan (RPP). See Retiring allowances in the RRSP section for more information.

Tax will not be withheld from the part of your retiring allowance that your employer transfers directly to your RRSP or your RPP.

Tax will be withheld from the portion of your retiring allowance that is not transferred directly to your RRSP or your RPP by your employer.

You may be entitled to deduct legal fees you paid to collect or establish a right to a retiring allowance. See line 232 - Other deductions.

A loss of office or employment usually refers to the elimination or expiration of a particular office or employment, for example, the abolition of a job or position for economic reasons or as the consequence of an employer's withdrawal from a particular business. However, a loss of office or employment may also refer to the loss of an income source of an employee who is released from an office or employment whether unilaterally or not.

Completing your tax return

On line 130, enter the amount from boxes 26 and 27 of your T4A slips.

On line 130, enter the amount from box 26 of your T3 slips.

If you transferred an amount, complete Schedule 7- RRSP Unused Contributions, Transfers, and HBP or LLP Activities, and include it with your return.

Forms and publications

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