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  • May 15th, 2009 1:48 am
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Newbie
Mar 7, 2009
45 posts

Laid off, company

Hi guys, I need some tax advice. I was laid off from my job this month, I
26 replies
Deal Addict
User avatar
Aug 21, 2007
3721 posts
222 upvotes
dude, spend a few $$ and chat with a lawyer...tax concerns are one issue but you should find out if what you got is reasonable or not....
Member
Nov 20, 2005
417 posts
Scarborough
how was that calculated? just curious I don't understand what you put 1 month/year? and your case 4 months to arrive at 21k?
Deal Addict
Feb 9, 2005
4166 posts
4 upvotes
The severance will be added to your income for 2009. If you get a new job right away, your income for 2009 will be well above your usual income in which case it does make sense to use your severance to make an RRSP contribution since it will reduce your taxable income. If you don't find a job/end up on EI your income will be lower than usual and while you'll still have to pay taxes on the severance, it would be less.

I went through something similar last summer, though I was taxed on my severance at the time. I found a new job quickly and maxed out my RRSP contributions to generate as large a refund of the taxes I paid as I could (though even after the RRSP contributions my income was still above my "usual" income.)
[OP]
Newbie
Mar 7, 2009
45 posts
bloodwulf wrote:
May 13th, 2009 6:02 pm
how was that calculated? just curious I don't understand what you put 1 month/year? and your case 4 months to arrive at 21k?
My gross monthly salary is around $5,200 so 4 months will be around $21,000.
[OP]
Newbie
Mar 7, 2009
45 posts
AllWheelDrift wrote:
May 13th, 2009 6:08 pm
The severance will be added to your income for 2009. If you get a new job right away, your income for 2009 will be well above your usual income in which case it does make sense to use your severance to make an RRSP contribution since it will reduce your taxable income. If you don't find a job/end up on EI your income will be lower than usual and while you'll still have to pay taxes on the severance, it would be less.

I went through something similar last summer, though I was taxed on my severance at the time. I found a new job quickly and maxed out my RRSP contributions to generate as large a refund of the taxes I paid as I could (though even after the RRSP contributions my income was still above my "usual" income.)
Thanks, that's what I was thinking too.
Deal Addict
Feb 9, 2005
4166 posts
4 upvotes
bloodwulf wrote:
May 13th, 2009 6:02 pm
how was that calculated? just curious I don't understand what you put 1 month/year? and your case 4 months to arrive at 21k?
OP is saying the company pays 1 months salary as severance for every year someone has worked there, which is 4 years (4 months severance) in the OP's case. (Meaning the OP has an annual salary of about $63k.)
Deal Addict
Feb 9, 2005
4166 posts
4 upvotes
The Ivory Actuary wrote:
May 13th, 2009 6:12 pm
Are you looking at my calculator over my shoulder?

(Just joking...I multiplied 21 by 3 in my head :razz :)
I did it in my head too, but clearly it took me longer. ;)
Deal Addict
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Dec 21, 2005
4717 posts
234 upvotes
Markham
agatha1939 wrote:
May 13th, 2009 5:54 pm

3) There is a big chance that I will be relocated to another site (in MB). In that case, I don
:idea: :) :lol: :razz: :D
Member
Nov 20, 2005
417 posts
Scarborough
AllWheelDrift wrote:
May 13th, 2009 6:10 pm
OP is saying the company pays 1 months salary as severance for every year someone has worked there, which is 4 years (4 months severance) in the OP's case. (Meaning the OP has an annual salary of about $63k.)
so if I worked 20 years in a company and my current salary was like the OP. I'd get 20*6000 or so? there is no ceiling on the amount?
Deal Addict
Feb 9, 2005
4166 posts
4 upvotes
bloodwulf wrote:
May 13th, 2009 8:13 pm
so if I worked 20 years in a company and my current salary was like the OP. I'd get 20*6000 or so? there is no ceiling on the amount?
Well, it all depends on company policy. 1 month/year is far more that is required under the labour laws. In BC, roughly speaking you are entitled to 1 week for every year, up to a maximum of 8 weeks, so a company could easily cap it if they wanted to. In my case I wasn't aware of any caps, but the company did have a minimum additional weeks on top of what people were legally entitled to under the labour code.
Deal Addict
Nov 18, 2005
4051 posts
604 upvotes
Kitchener
I always thought the standard severance package in Ontario was 1 week per year and you have to be employed at the company for a minimum of 5 years to get it, sounds like you're getting a good deal
Newbie
Nov 14, 2006
8 posts
I am in the same boat, getting terminated in September.... My Severance package is taxed though? How are you getting a severance package that is not taxed?
[OP]
Newbie
Mar 7, 2009
45 posts
fstedy wrote:
May 14th, 2009 4:24 am
I am in the same boat, getting terminated in September.... My Severance package is taxed though? How are you getting a severance package that is not taxed?
I don't know, that's what our VP told us in the meeting, although some people are telling me this is not possible... hopefully HR will be able to explain it better tomorrow, when we receive all the papers.
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