Guide to Global Payroll Management - 2020 - 11-134

Guide to Global Payroll Management
If the employee belonged to the company pension plan, fund or DPSP, but was not fully vested,
i.e. the employee did not fully own the employer's contributions to the plan made on their behalf,
the $1,500 is prorated according to the percentage not vested. For example, if the employee
was vested at 40%, i.e. they owned 40% of the employer's contributions made on their behalf,
then 60% of the $1,500 would be considered in the calculation to determine the eligible amount.
It is possible for an employee to transfer all or part of a retiring allowance to an RRSP or RPP.
Taxes are not deducted from the amount that is transferred directly to the employee's RRSP or
RPP. The amount that may be transferred is limited to the eligible amount, as calculated above,
and the employee's personal RRSP deduction limit.
Any monies paid to the employee, including any eligible portion of the retiring allowance not
transferred, are subject to tax at source.
An individual who chooses not to transfer some, or all, of the eligible portion of their retiring
allowance at the time the money is paid, has the opportunity to deposit an amount equal to the
eligible portion to an RRSP within 60 days following the end of the taxation year. Any
adjustments to the taxes paid would be included in the employee's personal tax return (T1).
NOTE:
When determining the number of years of employment to calculate the amount eligible for transfer the
following types of service may also be considered:

 employee's service outside Canada with the same employer;

 employee's service with an associated employer;

 continued employment when employer acquires a business;

 any previous years of employment when years of service are recognized in determining pension
benefits; and

 previous years of service when there have been breaks in service.

YEAR-END REPORTING
A retiring allowance is reported on a T4 slip under codes 66 (eligible retiring allowance) and/or
67 (non-eligible retiring allowance). Do not include the retiring allowance in Box 14. For Quebec
purposes, a retiring allowance is reported on the RL-1 in box O and a footnote code "RJ"
entered in the footnote code box. Remember also, that in Quebec, the amount that represents
the pay in lieu of notice portion would also be included in Box O and the footnote code "RJ".
TRANSFER REQUIREMENTS
CRA does not require documentation to be completed relating to the amounts transferred. The
document on the following page, as adapted by the CPA, serves as a tool for employers to
transfer funds directly to an RPP or RRSP on an employee's behalf.
Note: For further information on terminations, please see the CPA's Termination Guidelines at
https://www.payroll.ca/ under Resources ➜ Payroll Guidelines (login required).

DIRECT TRANSFER OF A RETIRING ALLOWANCE
This form can be used for the transfer of either the eligible or non-eligible part of a retiring allowance to a registered
retirement savings plan/registered pension plan (RRSP/RPP). The employer must deduct income tax from any part of

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Guide to Global Payroll Management - 2020

Table of Contents for the Digital Edition of Guide to Global Payroll Management - 2020