Statement of Qualifying Retroactive Lump Sum Payment

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Statement of Qualifying Retroactive Lump Sum Payment

Post by Willie on Thu 23 Feb 2017, 13:23

I received this form today from Manulife for years 2008 -2015 payments from the LTD appeal process. Can someone explain to me what I am to do with this form? What is it's purpose? Thank you so much.

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Re: Statement of Qualifying Retroactive Lump Sum Payment

Post by Trooper on Thu 23 Feb 2017, 14:58

That's a T1198, they could have sent you that by mistake, unless they found a mistake on their behalf sending you this form.

Nevertheless, they usually don't send out forms without a explanation as to why.

You need to contact your SISIP CM and ask them what this is all about.
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Re: Statement of Qualifying Retroactive Lump Sum Payment

Post by Willie on Thu 23 Feb 2017, 15:43

Thanks Trooper, would it be because my spouse won his ltd appeal last year and then he received a settlement from Manulife?

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Re: Statement of Qualifying Retroactive Lump Sum Payment

Post by Trooper on Thu 23 Feb 2017, 15:49

It could be, an easy way to know is check the T4A for amounts received regarding retro.

If this is the case, they, Manulife would have sent you a T1198 with your T4A.

Also, you should get legal fees receipt from MC, to claim.

I was under the impression that all appeals were completed in 2015, and all approved applicants were paid their retro in 2015.
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Re: Statement of Qualifying Retroactive Lump Sum Payment

Post by Willie on Thu 23 Feb 2017, 18:19

Thanks Trooper, my spouse won his appeal for LTD last year and was paid last year. We do have a receipt for legal fees paid. So now apparently we have a T1198 and the T4A. What is the purpose of the T1198? Is it to go back and recalculate his taxes for 2008-2015? Is there any other form we need to use with the T1198? or do we have our accountant submit the T1198 with his 2016 taxes? Thank you again.

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Re: Statement of Qualifying Retroactive Lump Sum Payment

Post by Trooper on Thu 23 Feb 2017, 18:40

The T1198 is to request the CRA to tax the retro in a way that taxes it as for prior years that reflects your retro as if you received them in those years.
Manulife should have input the years and numbers on the T1198 sent to you.
Your accountant can do the rest and if I'm not mistaking they have to be mailed in to the CRA, both the return with the attached T1198.

You might also get a T5 for the paid interest which may not have been taxed.
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Re: Statement of Qualifying Retroactive Lump Sum Payment

Post by Willie on Thu 23 Feb 2017, 18:58

Yes we did get a T5. So am I correct in thinking that the accountant won't be able to tell us how much taxes we owe until CRA does their calculations with the T1198? We maxed out the RRSP's but even with that I suspect we are going to owe taxes. We do have a disability tax credit and legal fees to submit. The other component is the money we had to pay back to DVA when spouse won his appeal. We still are not sure how or what documentation we will get for that money that was returned to DVA. Thanks Trooper.

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Re: Statement of Qualifying Retroactive Lump Sum Payment

Post by Trooper on Thu 23 Feb 2017, 19:12

Regarding knowing what you owe once your taxes are completed, yes, you will know the amount, the T1198 only comes into play later once the CRA has reassessed the years and numbers that reflect the T1198. Note: You need to ensure that the CRA confirms it has received the T1198 and is going to act on it.
The full amount of income received in 2016 will be put on your return, including the T5. So you will know what you owe and hopefully once the T1198 is completed, it will give you some relief. Also, Maxing out your RRSP will help for sure.
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Re: Statement of Qualifying Retroactive Lump Sum Payment

Post by Willie on Thu 23 Feb 2017, 20:37

Thank you Trooper. Any sense of what will happen regarding the money we had to repay back to DVA? Will we get some form of paperwork to submit with our taxes from DVA. I have been confused on this point.

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Re: Statement of Qualifying Retroactive Lump Sum Payment

Post by Trooper on Fri 24 Feb 2017, 06:07

VAC should have already sent you the breakdown of what you paid back.

What I would do if I were you is first, contact VAC and ask for them to send you the breakdown, what you need to get is the dollar amount of what you paid in taxes.

Then I would contact the CRA and confirm with them if you can submit those taxes paid on line 252 of your 2016 return, to claim those taxes paid.
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Re: Statement of Qualifying Retroactive Lump Sum Payment

Post by Trooper on Fri 24 Feb 2017, 12:18

Willie,

I just got some more info regarding those funds you paid back to DVA.

One person suggested you put the total amount paid back to DVA on Line 232

The taxes withheld from your SISIP lump sum should be claimed on Line 437

This should balance it out, if that makes any sense.
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Re: Statement of Qualifying Retroactive Lump Sum Payment

Post by Willie on Fri 24 Feb 2017, 19:49

Thank you Trooper, I will make sure and see what the accountant does for sure with those figures. Did the person say why I should put the total amount paid back to DVA on line "232 Other Deductions"?

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Re: Statement of Qualifying Retroactive Lump Sum Payment

Post by Trooper on Sat 25 Feb 2017, 05:41

Yes he did say that on Line 232 - Other deductions, there's an area for Income amounts repaid, and he also said there's an area for notes to explain your repaid income.

Whether Line 232 is indeed the proper area to address those funds repaid to DVA, I'm just not sure.

It's one of those situations that you don't see much, I've never had to deal with that particular scenario, hopefully you will get the proper answer from your accountant and get your taxes completed properly.

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Re: Statement of Qualifying Retroactive Lump Sum Payment

Post by Willie on Sat 25 Feb 2017, 09:19

Thank you so much Trooper, you don't know how much you have helped us.

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Re: Statement of Qualifying Retroactive Lump Sum Payment

Post by Willie on Wed 15 Mar 2017, 20:07

We had our taxes completed and my spouse had to pay back $9000 to CRA today. We were prepared but it still stings. That's even with a disability tax credit and a letter from DVA for the overpayment money we repaid to go on line 232 as other deductions.  We also maxed out our RRSP's. The form T1198 was also submitted and hopefully that will give us some relief if and when CRA does the calculations. So clearly not enough taxes were taken off from Manulife for the class action appeal settlement.


Last edited by Willie on Wed 15 Mar 2017, 20:25; edited 1 time in total (Reason for editing : Correct Line 232)

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