T4A – Pension, Retirement, Annuity, and Other Income

Supplemental pension plan

Those are pension income plans or pensions that give entitlement, at the time of retirement, to income payments over and above those provided for under the registered pension plans.

These supplemental pension plans are used to increase the benefits provided for under the registered pension plans or to set up a complementary plan.

Scholarships (study grants), fellowships, bursaries, and artists’ project grants

Scholarships (study grants), fellowships and bursaries can be exempt from tax (in full or partially) or taxable, based on their type and the taxpayer’s financial situation. To allow Taxprep to correctly determine the income amount that must be reported on line 13010, you must enter the scholarship amount that was received in the appropriate box 105.

Scholarships that are non-taxable in full

The following scholarships that were received by the taxpayer during the year are not taxable and must be reported in box 105¹, Scholarships, bursaries or fellowships – Eligible for the full exemption:

• scholarships (study grants) and bursaries to attend an elementary or a secondary school;
• postsecondary scholarships (study grants) bursaries or fellowships received by a taxpayer, if they relate to their enrolment in an education program for which the taxpayer is considered as a qualifying full-time student for 2018, 2019 or 2020.

Scholarships eligible for a $500 exemption

If the taxpayer is not a “qualifying student” , the postsecondary scholarships, bursaries or fellowships that they receive in the year are eligible for a $500 income tax exemption and must be entered in box 105², Scholarships (study grants) bursaries or fellowships – Eligible for the $500 exemption.

Scholarships received in connection with a part-time program

When a scholarship, fellowship, or bursary is received in connection with a part-time program for which the taxpayer is considered as a part-time “qualifying student” for 2018,2019 or 2020, the scholarship exemption is equal to the amount of tuition paid for the program plus the costs of program-related materials.

Such scholarships must be reported in box 105⁴, Scholarships (study grants) bursaries or fellowships – Received in connection with a part-time program.

In order to calculate the exempt portion of a scholarship received in connection with a part-time program, enter the tuition fees and the cost of program-related material in the worksheet of line 13010.

Artist project’s grant

If the taxpayer received an artist project’s grant, consult the folio S1-F2-C3, Scholarships, Research Grants and Other Education Assistance to know which amount must be reported.

Lump-sum payments accrued to December 31, 1971

A taxpayer who receives a lump-sum payment out of a pension fund or a DPSP, of which they were a contributant before 1972, can elect to exclude the amount accumulated on December 31, 1971, from their income. In that case, a special averaging tax applies. Generally, this special averaging tax is at the average effective federal rate of tax applicable to the taxpayer's income for the three years immediately preceding the year in which the payment is received.

However, the program does not allow for the calculation of the special tax. In order for the taxpayer to take advantage of this measure, a note must be attached so the request can be made when filing the return and the CRA will do the necessary calculations.

Annuity Income

A taxpayer qualifying for the Eligible Pension Income Amount of $2,000 can report all or a portion of the amount in box 024 as eligible pension income. Otherwise, these amounts are considered other income.

Annuities that are taxable under paragraph 56(1)(d), net of a 60(a) deduction, should be claimed as cumulative investment income on Form T936.

The taxpayer will generally qualify for the pension income amount if they are age 65 or over. For taxpayers who are age 64 or under, the annuity will ONLY qualify if it was received due to the death of a spouse.

The amount of eligible pension income is calculated in the Eligible Pension Income Amount workchart.

Notwithstanding the fact that the instructions on the T4A slip indicate that the premiums paid to a group term life insurance plan should be entered on line 10400 of the T1 return, the program allows you to report this amount on line 13000.

The inclusion of this amount on line 13000 is appropriate when, for example, a retiree is not eligible for the Canada employment amount. You can use box 119² to report the premiums paid to a group term life insurance plan on line 13000 and, this way, not claim the Canada employment amount.

When you answer “Yes” to this question, Taxprep carries the amount of taxable travel benefits to Form T2222, Northern Residents Deductions.

The amount of the taxable benefits related to a loan granted to a shareholder is entered in box 117 of the T4A slip while the amount of the other taxable benefits provided to a shareholder is entered in box 28³ of this slip. Because these benefits are taxable under subsection 15(1) of the Income Tax Act, they constitute investment income for purposes of the return. Therefore, the amount entered in box 28³ is updated to Section II, Interest, other investment income, and income from foreign sources of the Investments worksheet.

However, in the instructions on the T4A slip, the CRA specifies that the amount in box 117 must be updated to line 13000 of the federal return. The program complies with this requirement, but because this amount constitutes investment income, it is also updated to Part 2 of Form T936, Calculation of Cumulative Net Investment Loss (CNIL).

For purposes of the Québec return, the amount in box O and identified by code RO, Benefits received by a shareholder, on the RL-1 slip must be updated to line 13000, Interest and other investment income of the TP1 return. The amounts entered in boxes RO¹ and RO² in the Québec column are therefore updated to this line.

Amounts from boxes 144, 146, 148 and 195 are not reported in the tax return, but are transmitted to the CRA if the return is filed electronically.