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Personal Tax
-> Severance or retiring allowance
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$2,000 for each year or part year of service with the employer before 1996, and |
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an additional $1,500 for years of service which occurred before 1989, in which the employer's contributions to a company pension plan had not vested in the employee. Thus, up to $3,500 per year can be transferred for years of service prior to 1989. |
The total amount transferred to the RRSP cannot exceed the severance or retiring allowance received.
Years of part time employment also qualify as years of service. Even if only one day is worked in the year this qualifies as a year of service.
If the severance or retiring allowance is not transferred directly into an RRSP, the qualifying amount can still be contributed to the RRSP in order to be allowed as a deduction on the tax return for the year it was received. To qualify, the contribution must be made within 60 days of the end of the calendar year in which it was received.
Tax Tip: Defer tax by transferring your severance or retiring allowance to an RRSP.
Revised: August 30, 2011