I received approval from CRA to reduce tax deduction at source on a lump sum severance payout (T1213) and moved that money into my RRSP. How would I go about indicating this in Turbo Tax for the purpose of my tax return?
thanks for your help
I hope that your payroll who issued you the severance package have a copy of the form so the reduce the tax on your severance payment. Usually payroll deals he form T1213.
Yes, Delphision is right, your tax return will be match with what CRA has got on file for you.
Because severance payment is not considered employment income such as salary or wages, for payroll purpose, the tax withholding calculation is different, and there is another rate to use, special for lump sum, that can be heavy. There is no exemption on a severance payment. These are the rate http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/clcltng/spcl/lmpsm/wthhldng-eng.html, in Quebec there are two rates, federal and provincial, outside Quebec there is only one rate which combines federal and provincial rate.
Also, the user is talking about receiving a severance payment at the end of employment. Only in Ontario, severance payment is provincially legislated, and with the employees of the federal government. All other provinces and territories in Canada do not have a provincially legislated severance payment upon termination /lay off of employment.
A CRA Rep mentioned that the PIL payout $ should be recorded as a RRSP Designated Transfer in Schedule 7 so that that portion from PIL $ would not be taxed, however I get the following error "The amount you designate for transfer to an RRSP/PRPP cannot be greater than the eligible income reported for transfer." Because of this error, I cannot file my taxes, yet when I remove the transfer I owe a huge amount of taxes.
Am I reading you correctly in that I should enter nothing for RRSPs, submit with taxes owing, and let CRA work it out?