A retirement compensation arrangement (RCA) consists of a supplementary retirement plan (for one employee) that has developed surplus that the employer wishes to withdraw. The Directorate stated:
A “lump sum payment” is defined for the purposes of subsection 103(4) in subsection 103(6) of the Regulations. Unless an RCA is a superannuation or pension plan that is being wound up, a payment of surplus from an RCA to an employer is not a “lump sum payment” under this definition (see paragraph 103(6)(a) of the Regulations and clause 40(1)(a)(i)(B) of the Income Tax Application Rules).
Since the Payment is not a “lump sum payment” for the purposes of the withholding rules, it is subject to subsection 102(1) of the Regulations. … Since Schedule I does not address this situation, the Payment is subject to subsection 106(1). Under this rule, withholding is generally based on the amount of tax that may reasonably be expected to be payable under the Act by the recipient with respect to the payment.