A retiring allowance is an amount paid to an employee upon
A retiring allowance may include an amount reimbursed for sick leave accumulated but not used before the employee's retirement or resignation, an amount paid for damages, or compensation in lieu of notice.
A retiring allowance may be transferred in whole or in part to a registered pension plan (RPP) or a registered retirement savings plan (RRSP),
You are not required to withhold income tax from the portion of the retiring allowance that is transferred directly to an RPP or an RRSP and that may be deducted from the employee's or former employee's income. The deductible amount is the amount determined under the Income Tax Act (Statutes of Canada).