Form T1198 Retroactive Lump-Sum Payment Statement: Edit Online Free & Download PDF
Retroactive Lump-Sum Payment Statement: Statement of Qualifying Retroactive Lump-Sum Payment
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Form T1198 in short
Form T1198 is a statement a payer gives to a person who received a qualifying retroactive lump-sum payment, such as back pay from a court order or arbitration award, or retroactive pension, EI or support payments. It breaks the payment down by the years it relates to. The recipient can then ask the CRA for a special tax calculation instead of having the whole amount taxed in one year.
| Issued by | Canada Revenue Agency (CRA) |
|---|---|
| Current version | T1198 E (26) (checked 2026-10-25) |
| Who fills it in | The payer fills out and signs the form and gives it to the recipient. The form says to complete one form for each qualifying payment made to an individual (other than a trust) in 1995 or later. |
| Who receives it | The recipient of the payment. The recipient uses it with their income tax and benefit return for the year of payment. |
| Where to send it | The payer gives it to the recipient, not the CRA. A recipient filing a paper return attaches it to the return for the year of payment if the prior years principal is $3,000 or more. Since February 2025, the form says recipients can file electronically even when asking for the special calculation, and keep the T1198 in case the CRA asks for it. |
| Deadline | No separate filing date. The recipient uses it with the return for the year the payment was received. |
| Official links | Official page · Official PDF |
What changed
The form says that as of February 2025 you can send your return electronically even if you ask for the special tax calculation. This is the 2026 version (T1198 E (26)).
How to fill out Form T1198, line by line
| Recipient | Name, SIN and year of payment The recipient's name and social insurance number, and the year the lump sum was paid. |
| Description | Description of QRLSP and reasons for payment What the payment is and why it was paid, for example an arbitration award for back wages. |
| Box 68518 | Total amount (principal and interest) The full payment, including any interest. |
| Box 68519 and totals | Total principal and total interest Principal for current and prior years, interest for current and prior years, and principal for prior years only. The prior years principal decides whether the $3,000 threshold is met. |
| Boxes 68520 to 68560 | Breakdown of principal by year The principal that relates to each year, from the 40th prior year to the current year. Do not include interest in these boxes. |
| Certification | Payer certification The payer's printed name, signature, position or office, and date. |
Common mistakes to avoid
- The recipient filling out the form. The payer completes, signs and gives it to the recipient.
- Using one form for several payments. The form says to fill out one form for each QRLSP paid.
- Including interest in the yearly principal breakdown. The form says not to.
- Treating negotiated back pay under normal collective bargaining as qualifying. The form says it does not qualify, although an arbitration award does.
- Including parts that qualify for deductions such as legal expenses or salary reimbursements. The form says these are not qualifying amounts.
- Leaving the payment off the recipient's slip. The form says the QRLSP income has to be included on the T4, T4A, T4E or other slip.
- Counting a year in which the recipient became bankrupt, which the form says is not an eligible tax year.
Questions about Form T1198
What is a qualifying retroactive lump-sum payment?
A lump sum paid after 1994 that relates to earlier years when the person was a resident of Canada for the full year. Sources listed include employment income under a court order, arbitration award or lawsuit settlement, EI benefits, pension benefits, support payments, wage-loss replacement benefits and Canadian Forces income replacement benefits.
Will the CRA reassess my old returns?
No. The form says the CRA will not reassess prior years. You can ask the CRA to tax the prior year parts as if you received them in those years.
Is there a minimum amount for the special tax calculation?
Yes. The total principal relating to prior years after 1977, from all qualifying payments, must be $3,000 or more.
Can I file my return online if I have a T1198?
Yes. The form says that as of February 2025 you can file electronically even when asking for the special tax calculation. Keep the T1198 in case the CRA asks for it.
Does union negotiated back pay qualify?
No. The form says amounts under normal collective bargaining, such as negotiated back pay, do not qualify. An amount from an arbitration award does.
I received two lump sums. What do I do?
Each payer fills out one form for each payment. Add the prior years principal amounts from all forms. If the total is $3,000 or more and you file on paper, attach all the forms.
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Checked against the official sources on 2026-10-25. PDF Editor Hub is not affiliated with the Canada Revenue Agency or any government agency. This page is general information, not legal or tax advice.