T1198: Statement of Qualifying Retroactive Lump-Sum Payment
Form T1198 is completed by the payer of a qualifying retroactive lump-sum payment so the recipient can ask the CRA for a special tax calculation.
This is the genuine CRA PDF, unmodified. Source: CRA official page.
What is T1198?
T1198, Statement of Qualifying Retroactive Lump-Sum Payment, describes a lump-sum payment of $3,000 or more that relates to one or more earlier years, such as back pay, certain benefits, or support arrears. The special tax calculation spreads the income back to the years it relates to, which can reduce the tax compared with reporting it all in the year received.
This is a dynamic (XFA) PDF built for Adobe Acrobat Reader and will not fill in a browser or a basic PDF viewer, so download it and open it in the free Adobe Acrobat Reader. The payer completes the form with the principal amount, any interest, and the breakdown by year, and gives it to the recipient to file with their return.
Who files T1198?
- Payers issuing a qualifying retroactive lump-sum payment of $3,000 or more
- Employers or payers of back pay, benefits, or support arrears relating to earlier years
- Recipients who attach the completed form to their tax return
- Anyone whose lump-sum payment could qualify for the CRA special tax calculation
How to fill out T1198
- Download the T1198 and open it in the free Adobe Acrobat Reader; it will not fill in a browser.
- As the payer, enter the recipient details and the total qualifying lump-sum amount.
- Break the payment down by the year or years it relates to, including any interest.
- Sign and date the statement as the payer and give it to the recipient.
- The recipient files the completed T1198 with the CRA so it can apply the special tax calculation.
Get T1198
This is a dynamic PDF from CRA: it only fills in correctly in Adobe Acrobat Reader, so there is no in-browser fill here. Download the genuine T1198 below and open it in the free Adobe Acrobat Reader to complete and save it.
Download the official T1198 PDFFrequently asked questions
What is a qualifying retroactive lump-sum payment?
It is a lump sum of $3,000 or more (not counting interest) that relates to one or more prior years, such as employment back pay, certain wage-loss benefits, spousal support arrears, or similar amounts. The T1198 lets the CRA spread it back to the years it belongs to.
Who completes the T1198, the payer or the recipient?
The payer completes the statement and gives it to the recipient. The recipient then files it with the CRA, which decides whether the special tax calculation gives a better result than reporting the full amount in the year received.