# Severance pay and leaving Canada - best tax strategy



## christodevillo (Jun 14, 2011)

Hello Everyone,

After 15 years of great relationship, my employer has thanked me for my service and awarded me with approx 105k. My wife is still working but she will quit her work at around November and she will be moving with our son to Germany and I will be joining them in March/April next year. I will not have any income after August. I would appreciate if someone could help me with the following questions:
- is it true I can move $30K into RRSP before tax? ($2k x 15 years)
- can I split the severance pay and collect the rest (75k) in 2012? I work for a large Canadian bank and I am sure there will be no problem collecting money next year.

Does this scenario make sense from tax point of view? Money is not the issue for us right now since we were able to save up some and we do not need anything right now.

Any other possible scenarios?

Thank you

Chris


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## I'm Howard (Oct 13, 2010)

Yes, and see if you can stay on the payroll for an extended period, build up Pensions etc.

Good Luck with Germany, pretty country but expensive and crowded and with today's turbulent Euro, I would rather stay here.

Europe is going through very dramatic challenges, personally I do not believe the ECU will survive.

Not Germany, but Strassbourg would be my choice.


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## Toronto.gal (Jan 8, 2010)

christodevillo said:


> 1. is it true I can move $30K into RRSP before tax? ($2k x 15 years)
> 2. can I split the severance pay and collect the rest (75k) in 2012? I work for


1. Per link below, it only applies for years employed prior to 1996.

http://www.taxtips.ca/personaltax/employees/severance.htm

2. If your employer gives you the option, yes, you can split the payment.

Good luck.


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## christodevillo (Jun 14, 2011)

Thank you for all your answers - I know now where I am standing. 

About the comments and advices: we are both from Germany and that is our home - the reason we are going back is because of need to be closer to our families. Is Europe more expensive? well, yes and no - depends what you compare. Believe me: living in Vancouver is not inexpensive neither - I cannot see many young educated people being able to afford a house or even anapartment here... But that's just my opinion. 

Thanks again!


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## kcowan (Jul 1, 2010)

I think continuing salary and deducting that from any lump sum payment would benefit your employer too.


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## christodevillo (Jun 14, 2011)

kcowan said:


> I think continuing salary and deducting that from any lump sum payment would benefit your employer too.


Thank you kindly. Is this option feasible? Will employer consider it on their own or CRA should approve this first?

Chris


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