A retiring allowance includes:

The CRA defines a retiring allowance (also called severance pay) as an amount paid to an employee when or after they retire or lose their job, in recognition of long service or for the loss of office or employment. This matches option A.

The other options are specifically not retiring allowances under CRA guidance. The CRA states a retiring allowance does not include salary, wages, bonuses, or overtime, which rules out bonus or incentive pay and accumulated overtime. The CRA also states it does not include payments for accumulated vacation leave not taken before retirement, which rules out vacation pay.

This classification matters in payroll because retiring allowances have distinct rules: for example, they are not subject to CPP or EI deductions, and part of a retiring allowance may be eligible for direct transfer to an RRSP/RPP under special rules (based on pre-1996 service).