Is a retiring allowance, that is paid in instalments, required to be paid within a certain period of time after the termination of employment? CRA responded:
As stated in paragraph 2.26 of the Folio [S2-F1-C2], in some cases, employers offer employees the choice of receiving a retiring allowance as a lump sum at the time of termination or in instalments over a number of years. It is also mentioned in that paragraph that if an individual chooses the instalment option on or before the employment is terminated, the instalments are taxable in the year received.
Provided an amount is a retiring allowance, there is no provision in the Act which prohibits the payment of such an amount in installments or requires it be paid within a certain period of time after the retirement or the loss of employment.