Can I negotiate to receive a retiring allowance instead of salary continuance to save on tax?

Not simply by relabeling it — this is an important limit to understand before going into any severance negotiation with tax savings as a goal. Whether a termination payment is properly treated as a retiring allowance, with its associated tax advantages like the eligible RRSP rollover, depends on the payment's true legal character and purpose, not on what you and your employer agree to call it in a settlement or termination agreement.

CRA looks at the substance of what the payment actually represents. Salary continuance — payments that essentially continue your regular pay for a period after termination — functions differently from a payment genuinely made in recognition of long service or loss of employment, and simply writing "retiring allowance" into a settlement document doesn't change what the payment actually is if its real structure and purpose look like continued salary instead.

That said, how a termination package is genuinely structured — not just labelled — can affect its tax treatment, so there's real value in getting the structure of a severance negotiation reviewed by someone who understands this distinction before signing, rather than assuming a label change alone achieves a better tax result. A poorly supported "retiring allowance" characterization can be challenged later, which creates uncertainty neither side benefits from.