Do severance packages include CPP, EI, etc.?
A severance package is considered a retiring allowing. As such, it won’t include deductions for CPP and EI, but will be subject to income taxes. To offset the impact of a higher tax bracket, you are allowed to make a special contribution to your RRSP above and beyond any carry over you may have from under contributing in preceding years. There are many tax planning strategies. Consult a lawyer or tax planning specialist.
