If the individual disposed of an interest in a retirement compensation plan (RCA), you have to include the amount received (box 18) on line 13000 of his income tax return. If non-deductible contributions have been made to this RCA, or an interest in this RCA has been purchased, you may claim a deduction on line 23200 of the income tax return
The amounts in boxes 14, 16 and 20 are included on line 13000 of the tax return and may provide entitlement to a deduction on line 23200.
Contributions made by an employee to an RCA are deductible if they respect the provisions of paragraph 8(1)(m.2).
This paragraph allows employees to claim contributions to a pension plan that is an RCA, if:
- the employee was required to make contributions under the terms of his employment and the total amounts contributed for the year does not exceed the total contributions made by the employer (or any other person) on behalf of the employee;
- the contribution was made to a plan that was a registered retirement plan for which registration has been revoked and the contributions was made according to the terms of the plan.
In each of the above cases, the contributions must be paid to a custodian who is a resident of Canada.
If the contribution is not deductible under paragraph 8(1)(m.2), the employee may be entitled to claim an amount in the year in which he receives a sum from the RCA.
If an amount found in box 18 is included in income, the line 23200 deduction must equal A or B below, whichever is less:
A = the amount in box 18
B = (C – D)
C = the total purchase price you paid while a resident of Canada to acquire the interest in the RCA, the non-deductible contributions you made to this RCA before the end of the year of disposition, and amounts transferred from another RCA.
D = the total amounts transferred to another RCA, and amounts you previously deducted for any amounts received for this RCA (do not include a deduction claimed for amounts received out of the RCA as a retiring allowance). See Note below.
If you include an amount from box 14, 16, or 20 in your income, the line 23200 deduction must equal A or B below, whichever is less:
A = the total amount from this RCA that you include in income this year.
B = (C – D)
C = the total of amounts transferred from another RCA, plus
- if you contributed amounts directly to this RCA that were non-deductible: the amounts you contributed to this RCA before the end of the year while it was an RCA. Do not include employee contributions shown in box 20 of your T4 slip. Those amounts are usually deductible on line 20700 of your income tax and benefit return;
- if you bought an interest in an RCA: amounts you paid before the end of the year while you were a resident of Canada to acquire an interest in the RCA; and
- if you sold an interest in an RCA: amounts received or receivable by you at a time you were resident in Canada as proceeds of disposition of an interest in the RCA.
D = the total of amounts transferred to another RCA, and all amounts you deducted in an earlier year for amounts you received from this RCA. (Do not include a deduction claimed for amounts received out of the RCA as a retiring allowance.)
Note: If your employer contributed to this RCA, you may transfer the eligible portion of the amount you receive as a retiring allowance from this RCA to your RPP or your RRSP. Claim a deduction for the amount you transfer to your RPP on line 20700 of your income tax return, and for the amount you transfer to an RRSP on line 20800 of your income tax return.