Wyrstiuk – Tax Court of Canada finds that failure to recognize that a termination payment was not earned income gave rise to RRSP over-contribution tax

A lump sum of $165,000 received by the taxpayer in 2014 as a negotiated payment for the termination of his employment was found, in light of Atkins, to constitute a retiring allowance rather than income from employment. This meant that the sum was not added to his earned income for 2014, so that a contribution of $24.270 made in February 2015 to his RRSP gave rise to an over-contribution.

Jorré DJ recomputed and reduced the amount of the s. 204.1(2.1) tax assessed by CRA, so that the case serves as a numerical illustration (and verbal explanation) of how to compute the over-contribution tax.

Neal Armstrong. Summary of Wyrstiuk v. The Queen, 2022 TCC 10 under s. 204.2(1.1).