rugbyfiend

I have received a qualifying retroactive lump sum payment from the U.K. Pension service together with their break-down calculations of how the lump sum was calculated over a period of 9 years. The CRA accepts that the U.K. Pension service will not fill in form T1198 E as they are not interested in the CRA policies or converting U.K. currency to Canadian - I can Complete the T1198 E form but as the recipient of the payment I can hardly expect to be approved as the person who certifies that the information is correct and complete. How can I submit the information to the satisfaction of the CRA?

JonboyE

You cannot complete the T1198. Only a payer can do that I am not at all surprised that a UK payer will not want to get involved with Canadian tax.

It is not something I have direct experience of but I think you have two options:

1) Show the amount as a lump sum payment on line 130 and live with the tax consequences.

2) Show the amount that relates to 2016 on line 130 this year and file T1 Adjustment requests for the relevant previous years. You will need to provide the CRA with sufficient information to justify this treatment.

rugbyfiend

Thank for your input JomboyE.
I have finally managed to contact a Senior Tax Advisor and CRA has advised that I should request a special calculation at the same time as I submit my 2016 return along with the letter from the UK pension Service enclosing their breakdown of how the lump sum payment was calculated.

This breakdown indicates the weekly pension payments (together with separate details of interest due) over the 9 year period in question. They say I should complete the T1198 to the best of my ability, using the Bank of Canada's historical data for average annual exchange rates, to indicate the total principal pension payments that I would have received in dollars Canadian, for each of the 9 years, together with the total interest at the end of the 9 year period.

I must still submit the regular tax return indicating the Lump-sum payment received in 2016 at the same time as I request the special calculation of the adjusted tax payment due. They will carry out their own calculations to confirm and/or adjust provided the re-assessment is beneficial!

JonboyE

Thanks for the update.