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Paying a retiring allowance in advance; Overpayments can become taxable benefits; Applying for a reduced EI premium rate
By Annie Chong
|Canadian Payroll Reporter|Last Updated: 03/05/2015

Paying a retiring allowance in advance

Question: One of our employees plans to retire at the end of August and will receive a retiring allowance in recognition of her long service. She is in the midst of a financial crisis, so the company is paying her the retiring allowance in advance to help her meet her financial obligations. Since she will not be transferring any of it to a registered pension plan or registered retirement savings plan, do we use the lump-sum tax rates to calculate income tax deductions on the payment?