Tax Adjustment

Retroactive Payments and Support-Payment Arrears – Quebec:

If you received a retroactive payment in 2024 and part of it (at least $300) relates to previous years, Revenu Québec can, at your request, average that portion to potentially reduce your tax. This means they calculate the tax as if you had received the payment in the previous years and adjust your 2024 taxable income and tax on line 443.

Payments that can be averaged include

• Employment income from a court judgment, arbitration, or settlement (lines 101 or 107)
• Wage-loss replacement benefits (line 107)
• Retroactive payments for lines 110, 111, 114, 119, 122, or 147
• Interest on retroactive payments (line 130)
• Support-payment arrears (line 142)
• Labour adjustment or income assistance benefits (line 154)
• Any retroactive payment in line 154 deemed an undue tax burden
• Universal Child Care Benefit retroactive payments (line 278)
• Earnings-loss benefits, supplementary retirement benefits, and career impact allowances under the Veterans Well-being Act (line 101)

How to request averaging

• Check box 404 on your return
• Complete form TP-766.2-V (Averaging of a Retroactive Payment, Support-Payment Arrears or a Repayment of Support) and enclose it with your return
• If completing Part 4 of the form, also check box 405

Cases where averaging is NOT allowed

• Compensation adjustments under the Pay Equity Act
• Retroactive payments already deducted in calculating taxable income
• Portions of retroactive payments transferred to a spouse

Specific cases

v

• Income replacement indemnities: Amounts shown in box O of the RL-5 slip will be averaged by Revenu Québec, with a tax adjustment on line 443
• Repayment of support: Portions relating to previous years can be averaged, with the tax calculated as if received in those years and adjustments made on line 443

Retroactive income replacement indemnities: If you received a retroactive payment reported on line 148 and part of it applies to previous years, the amounts will appear in box O of your RL-5 slip. Revenu Québec will calculate the tax as if you had received the payment in those previous years and adjust your 2024 tax on line 443.

If you received a repayment reported on line 142 and part of it relates to previous years, Revenu Québec can, at your request, average that portion. The tax will be calculated as if you had received the repayment in the previous years, and the adjustment will be made on line 443.