@Hal18 I didn't pursue this with the CRA, as they normally won't give advise, so as to not be held culpable. Almost every time I've consulted them I get "consult a tax lawyer/professional".
Eventually I found the following, as the T1198 guidance page was updated as a result of the Ontario teachers, and specifically states that the employee is "eligible for a special tax calculation", not 'will have their prior years re-assessed'. If it was a requirement, there'd be a standard form that every board would have to have completed and filed a copy with CRA---not allowing them creating letters in whatever form they want and making the employee putting it into the T1198.
Submitting the T1198 is something that benefits the person filing it, not the CRA, a most people would benefit from spreading the income out. As they've already deducted all the tax from it, the CRA has no interest in creating refunds for you, if you don't claim it. Have you ever experienced them giving you a refund for an RRSP contribution or donation amount that you forgot to enter/claim?
Using TurboTax actually made the calculating of benefit easy:
I made copies of all the previous year's files and added the amounts to each year as income, and looked to see how much the taxes went up---and for this year, I removed the amount of income that I moved.
For example, lets say the T1198 was for 5000 for amounts of 1000 each of 2020, 21, 22, 23, 24:
- I added 1000 as income to each of the previous years and saw tax go up by varying amounts, totalling $700.
- I then removed 4000 (total of the 4 years removed) of income from 2024 and saw the tax go down 500
So in my peculiar situation, it was better for me pay 500 extra this year, than 700 for the previous 4 years. It probably benefits most people to have the prior year amounts applied to the appropriate year. It took me a while to figure out why it benefitted me to have it all this year: provincial taxation. Because of all the thresholds and changes in Ontario provincial tax each year, it just worked out that it was better as a lump this year. I suspect that my situation is the rarity.
