Retiring allowance received after immigration date

[mackayr]

We have a client with an immigration (to Canada) date of July 11, 2018. Both spouses retired from their employment on July 5, 2018. Both spouses received significant retiring allowances on July 28, 2018.

Aside from any benefits from foreign tax credits, I can't find any reason why the retiring allowances would not be taxed in Canada.

Anyone deal with this scenario previously and aware of any provision in tax treaty or law that would permit excluding this income from taxation in Canada?

[nelsona]

It is taxable in Canada, if their residency start date is prior to July 28. same for any future vacation pay, bonus money, etc.

Retiring allowance is, of course, a purely Canadian term, so whatever they called it in US, it still taxable. You could look into whether foreign employment and foreign employees are allowed to shelter severance to the extent a Cdn worker would be (with the same conditions, like Pre-1996 work, etc), but I do not believe this is allowed.