Canadian Retirement Income
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Canadian retirement benefits are similar to the US in that there are nationally-sponsored retirement plans and also individually elected plans and employer-sponsored plans.
There are three types of national retirement plans in Canada that roughly correspond to the US Social Security system:
- CPP - Canadian Pension Plan
- QPP - Quebec Pension Plan
- OAS - Old Age Security
There are several types of individual and employer-sponsored plans:
- DPSP - Deferred profit-sharing plan
- PRPP - Pooled registered pension plan
- RCA - Retirement compensation arrangement
- RPP - Registered pension plan
- RRSP - Registered retirement savings plan
- RRIF - Registered retirement income fund
- SPP - Specified pension plan
Retirement benefits are reported on several Canada Revenue Agency (CRA) forms, including several flavors of Forms T4 and T4A along with Form NR4.
Any amount entered in the tax return needs to be converted to US Dollars. In general, use the prevailing exchange rate, i.e., the spot rate, when the taxpayer received the income. If the income was received evenly throughout the year, you can use a yearly average currency exchange rate. See here for more information about currency exchange rates.
Select the button below to see a list of income codes in Form NR4 Box 14 or 24 that relate to retirement income. The code tells you the type of pension income and thus whether it will be entered in the Social Security menu (CPP, QPP, or OAS) or the Foreign Employer Compensation menu (all others). (If you see a code not listed below, the income is not related to pension or retirement. You'll need to examine the Form NR4 instructions to find what the code means.)
Pension Income Codes
| Code | Description |
| 02 | Other – Periodic payments |
| 03 | Other – Lump-sum payments |
| 04 | Automotive products – Assistance benefits |
| 06 | Death benefit other than CPP or QPP |
| 07 | DPSP – Periodic payments |
| 08 | Dividends paid by Canadian subsidiaries to foreign parent corporations |
| 14 | Income-averaging annuity contracts – Report all benefits including lump-sum payments on proceeds of disposition of these contracts |
| 26 | RRIF – Periodic payments |
| 27 | RRIF – Lump-sum payments |
| 28 | RRSP – Periodic payments |
| 29 | RRSP – Refund of premiums |
| 30 | RRSP – Refund of excess amounts |
| 31 | DPSP – Lump-sum payments |
| 32 | RRSP – Amounts deemed received on deregistration |
| 33 | RRSP – Amounts deemed received on death |
| 34 | Registered supplementary unemployment benefits |
| 36 | Retiring allowance (severance pay) |
| 37 | RCAs |
| 39 | Superannuation or pension benefits – Periodic payments |
| 40 | Superannuation or pension benefits – Lump-sum payments |
| 41 | Textile, clothing, and leather goods – Assistance and superannuation or pension benefits |
| 43 | RRSP – Lump-sum payments |
| 44 | Old Age Security (OAS) payments (regular benefits) |
| 45 | Net federal (guaranteed income) supplement |
| 46 | Taxable CPP benefits |
| 47 | CPP – Disability benefits |
| 48 | CPP death benefits – Lump-sum payments |
| 49 | Taxable QPP benefits |
| 50 | QPP – Disability benefits |
| 51 | QPP death benefits – Lump-sum payments |
| 63 | RDSP - Registered Disability Savings Plan |
| 65 | PRPP – Periodic payments |
| 66 | PRPP – Lump-sum payments |
Entering income from a nationally-sponsored plan
Income from nationally-sponsored retirement plans is generally reported on Form T4A(P) Box 20 and should be reported in the individual tax return as Social Security benefits. To enter OAS, CPP, or QPP in Tax Processors Plus Desktop, from the Main Menu of the tax return select:
- Income
- Social Security Benefits
-
Taxpayer's Net SS Benefits from 1099-SSA & RRB-1099 or
Spouse's Net SS Benefits from 1099-SSA & RRB-1099 - Net SS Benefits from 1099-SSA & RRB-1099 - Enter the amount of the benefits converted to US dollars.
Include a preparer note in the return explaining the entry. To enter a preparer note, from the Main Menu of the tax return select:
- Miscellaneous Forms
- Notes / Statements
- Preparer Notes
- New - Create a note indicating the Canadian tax document and the amount received in Canadian dollars (CAD).
Entering income from an employer-sponsored or individual plan
To enter employer-sponsored or individual retirement income in Tax Processors Plus Desktop, from the Main Menu of the tax return select:
- Income
- IRA/Pension Distributions
- Other button
- Foreign Employer Compensation
-
New - For MFJ return, indicate if the income
is
for the
taxpayer or the spouse
- Foreign Employer's ID Number - optional entry
- Foreign Employer's Name - required entry
- Employer's Foreign Address - required entry
- Foreign Pension Received - enter the amount received converted to US dollars. This flows to Form 1040 Line 5a.
- Foreign Taxable Pension - enter the taxable amount received converted to US dollars. This flows to Form 1040 Line 5b.
Reminder: If the source document is in Canadian dollars, be sure to convert amounts to US Dollars. When converting to US dollars, use the conversion rate in effect on the day when the income was received. See here for more information about foreign currency conversion.
For instructions on claiming the Foreign Tax Credit, click here.
Note: This is a guide for entering Canadian retirement benefits into the Tax Processors Plus Desktop program. It is not intended as tax advice.
Additional Information:
IRS: Information on the United States–Canada Income Tax Treaty
Publication 901, US Tax Treaties
IRS: United States Income Tax Treaties - A-Z
IRS: Taxations of Foreign Pension and Annuity
CRA: T4A, Statement of Pension, Retirement, Annuity, and Other Income
CRA: T4A(P) Statement of Canada Pension Plan Benefits
CRA: NR4 Statement of amounts paid or credited to non-residents of Canada (payer's perspective)
CRA: Changes to your taxes when you retire or turn 65 years old (list of types of retirement income)