Lump sum payment - transfer value of pension

[Barb123]

My husband passed away and I received a lump sum equal to the transfer value of his pension at his date of death. He was not retired and I am not retired. The amount was paid from the UK.

Is this taxable? Where / how should I report it?

[Geo123]

Hello Barb123,

Please consult with a tax advisor or the CRA.

To enter Foreign lump-sum pension benefits there are multiple factors to consider : Foreign tax treaty / Type of foreign pension / if transferred to a RRSP or RPP / Foreign tax pad etc.

Below is an example :

Interview >> Foreign income – pension

Country from where you received the foreign income

If the country signed a tax treaty with Canada, a deduction under 20(11) will not be allowed.

[United Kingdom (tax treaty with Canada)]

Description of the source of the foreign income [UK lump ]

 If you are entering amounts in Canadian dollars, enter 1 for the exchange rate. The average exchange rate for $US was 1.3497 in 2023. See the Bank of Canada's website (www.bankofcanada.ca) for other exchange rates.

Exchange rate to apply [1.6784]

 *Type of foreign pension income [Foreign lump-sum pension benefits]

*Amount of foreign income received $1,000.00

 - Portion - indirect transfer to a RRSP $

 - Portion - indirect transfer to a RPP $

 *Amount of foreign tax paid (leave blank for US social security benefits) $

 Income exempt under a tax treaty (leave blank for US social security benefits) $

Example – Please consult with a tax advisor or the CRA.

[Barb123]

Thank you so much for the information. I have been unable to find a tax advisor with understanding of this situation but will continue looking.

If I do an 'indirect transfer to an RRSP or RPP' for the full amount I received, would that save me from paying income tax on the amount?

I don't have any room left for this year in my regular RRSP but I am part of a pension plan from my work (I still work, not retired yet) - would that help me?

Thank you,

[Geo123]

Hello Barb123,

You are welcome.  Sorry the COMMUNITY can not provide tax advice.  You can also consult with an accountant.

https://www.cpacanada.ca/en/the-cpa-profession/cpa-provincial-and-regional-accounting-bodies