Form T1198 "Statement of Qualifying Retroactive Lump-Sum Payment" - Canada

What Is Form T1198?

Form T1198, Statement of Qualifying Retroactive Lump-Sum Payment, is a legal document that individuals and companies residing in Canada can fill out if they paid a lump-sum payment in the last twenty-five years to ask the tax authorities to compute taxes differently for the beneficiary and spare them from the necessity to pay all taxes at once.

This form was issued by the Canadian Revenue Agency (CRA). The latest version of the document was released on January 1, 2021, with all previous editions obsolete. Download a fillable Form T1198 via the link below.

If you got a significant amount of money from a former spouse who finally sent you money to compensate the child support they owed, obtained money after a court order or lawsuit settlement, or received insurance, pension, or income replacement benefits, you may face tax liability that is difficult to cope with. In this case, the person or entity that provided the lump-sum payment needs to file this statement on your behalf - the tax amount will be adjusted and spread over several years.

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Form T1198 Instructions

Follow these steps to prepare Form T1198:

  1. Indicate the recipient's name, social insurance number, and the year you have made the payment.
  2. Describe the payment obtained by the recipient and list the circumstances under which it was paid - for instance, the former spouse has provided the recipient with a considerable sum of money considered child support or the beneficiary has claimed unemployment benefits from their insurance provider.
  3. Write down the total amount of money that was provided and the total principal for the current year and all prior years. Enter the total interest on the lump-sum payment. Provide a breakdown of the principal - record the principal amount for each applicable year without the interest.
  4. Confirm the information in the form is true and correct to the best of your knowledge, sign the document, state your office or position if applicable, and date the document.

Once the statement is prepared, attach it to your tax documentation and submit all files to the CRA by mail or in person - do not file the information online.

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Download Form T1198 "Statement of Qualifying Retroactive Lump-Sum Payment" - Canada

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Page background image
Clear Data
Protected B
when completed
Statement of Qualifying Retroactive
Lump-Sum Payment
To the payer:
Fill out this form if you paid a qualifying retroactive lump-sum payment (QRLSP) to an individual (other than a trust) in 1995 or later years. Enter the amount of
the QRLSP and its breakdown in the appropriate boxes below. Give the completed and signed form to the recipient of the QRLSP. If you paid more than one
QRLSP to an individual, fill out one form for each QRLSP paid. See the back of this form for details.
Note: The QRLSP income indicated on this form has to be reported on the recipient's information slip (such as a T4, T4A, T4E).
To the recipient:
We will not reassess your returns for prior years to include this income. However, you can ask us to tax the parts for the prior years as if you received them in
those years. You have to include the whole payment on the appropriate line of your return for the year. See the back of this form for details.
Name of recipient
Social insurance number
Year of payment
Description of QRLSP and reasons for payment
Total amount
Total principal
Total interest
Total principal
(principal
(current and
(current and
(prior years
68519
68518
and interest)
prior years)
prior years)
only)
Breakdown of principal (box 68519)
In the boxes below, enter the amount of principal that relates to each applicable year. Do not include the interest amount.
40th prior
30th prior
20th prior
10th prior
68520
68530
68540
68550
year
year
year
year
39th prior
29th prior
19th prior
9th prior
68521
68531
68541
68551
year
year
year
year
38th prior
28th prior
18th prior
8th prior
68522
68532
68542
68552
year
year
year
year
37th prior
27th prior
17th prior
7th prior
68523
68533
68543
68553
year
year
year
year
36th prior
26th prior
16th prior
6th prior
68524
68534
68544
68554
year
year
year
year
35th prior
25th prior
15th prior
5th prior
68525
68535
68545
68555
year
year
year
year
34th prior
24th prior
14th prior
4th prior
68526
68536
68546
68556
year
year
year
year
33rd prior
23rd prior
13th prior
3rd prior
68527
68537
68547
68557
year
year
year
year
32nd prior
22nd prior
12th prior
2nd prior
68528
68538
68548
68558
year
year
year
year
31st prior
21st prior
11th prior
1st prior
68529
68539
68549
68559
year
year
year
year
Current
68560
year
Certification
, certify that the information given on this form and in any attached documents is
I,
First and last name (please print)
correct and complete.
Position or office
Date
Signature of payer
See the privacy notice on your return.
T1198 E (21)
(Ce formulaire est disponible en français.)
Clear Data
Protected B
when completed
Statement of Qualifying Retroactive
Lump-Sum Payment
To the payer:
Fill out this form if you paid a qualifying retroactive lump-sum payment (QRLSP) to an individual (other than a trust) in 1995 or later years. Enter the amount of
the QRLSP and its breakdown in the appropriate boxes below. Give the completed and signed form to the recipient of the QRLSP. If you paid more than one
QRLSP to an individual, fill out one form for each QRLSP paid. See the back of this form for details.
Note: The QRLSP income indicated on this form has to be reported on the recipient's information slip (such as a T4, T4A, T4E).
To the recipient:
We will not reassess your returns for prior years to include this income. However, you can ask us to tax the parts for the prior years as if you received them in
those years. You have to include the whole payment on the appropriate line of your return for the year. See the back of this form for details.
Name of recipient
Social insurance number
Year of payment
Description of QRLSP and reasons for payment
Total amount
Total principal
Total interest
Total principal
(principal
(current and
(current and
(prior years
68519
68518
and interest)
prior years)
prior years)
only)
Breakdown of principal (box 68519)
In the boxes below, enter the amount of principal that relates to each applicable year. Do not include the interest amount.
40th prior
30th prior
20th prior
10th prior
68520
68530
68540
68550
year
year
year
year
39th prior
29th prior
19th prior
9th prior
68521
68531
68541
68551
year
year
year
year
38th prior
28th prior
18th prior
8th prior
68522
68532
68542
68552
year
year
year
year
37th prior
27th prior
17th prior
7th prior
68523
68533
68543
68553
year
year
year
year
36th prior
26th prior
16th prior
6th prior
68524
68534
68544
68554
year
year
year
year
35th prior
25th prior
15th prior
5th prior
68525
68535
68545
68555
year
year
year
year
34th prior
24th prior
14th prior
4th prior
68526
68536
68546
68556
year
year
year
year
33rd prior
23rd prior
13th prior
3rd prior
68527
68537
68547
68557
year
year
year
year
32nd prior
22nd prior
12th prior
2nd prior
68528
68538
68548
68558
year
year
year
year
31st prior
21st prior
11th prior
1st prior
68529
68539
68549
68559
year
year
year
year
Current
68560
year
Certification
, certify that the information given on this form and in any attached documents is
I,
First and last name (please print)
correct and complete.
Position or office
Date
Signature of payer
See the privacy notice on your return.
T1198 E (21)
(Ce formulaire est disponible en français.)
Clear Data
Statement of Qualifying Retroactive Lump-Sum Payment
Information for payers and recipients
What is a qualifying retroactive lump-sum payment (QRLSP)?
A QRLSP is a lump-sum payment paid to an individual (other than a trust) in a year that relates to one
or more prior eligible taxation years throughout which the individual was a resident of Canada. To be
a qualifying amount, the payment must have been paid after 1994 from one of the following sources:
• income from an office or employment received under:
– an order or judgment from a court or other competent tribunal
– an arbitration award
– a lawsuit settlement agreement (including damages for loss of office or employment)
• benefits from unemployment insurance or employment insurance
• benefits from a superannuation or pension plan (other than non-periodic benefits such as lump-sum
withdrawals)
• spousal, common-law partner, or taxable child support payments
• benefits from a wage-loss replacement plan
• Canadian Forces members' and veterans' income replacement benefits
Note: a year in which an individual became bankrupt is not an eligible taxation year.
Amounts not qualifying
An amount received under any part of a retroactive lump-sum payment that is eligible for any of the
following deductions, is not a qualifying amount:
• legal expenses
• salary reimbursements
• reimbursement of top-up disability payments
• repayment of pension or benefits
• deduction of social assistance payments, workers' compensation benefits
An amount under normal collective bargaining, such as negotiated back pay, is not a qualifying amount
(although an amount from an arbitration award does qualify).
Why provide the breakdown of a QRLSP?
Generally, a lump-sum payment is included in income in the year the recipient receives it. This may result
in a greater tax liability than if the payment had been received in the year or years to which it related.
A special tax calculation is available to individuals who receive QRLSPs that relate to any year after 1977.
The calculation applies if the total of all principal amounts that relate to prior years (after 1977) from all
QRLSPs is $3,000 or more.
If you are the payer of a QRLSP, fill out this form to help us determine if the special tax calculation is
beneficial to the recipient.
If you are the recipient of a QRLSP and if the amount shown for your "Total principal (prior years only)" is
$3,000 or more, attach Form T1198, Statement of Qualifying Retroactive Lump-Sum Payment, to your
return for the year of payment to ask for a special tax calculation. If you have more than one QRLSP form,
add the amounts shown for the "Total principal (prior years only)" on all your forms. If the result is $3,000
or more, attach to your return the QRLSP forms that payers have given you.
If you are reporting a QRLSP, you cannot file your return electronically and must file a paper return.
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