Commentary

E1.546 Exempt proportion where annuity term dependent solely on duration of life

Personal and employment tax

E1.546 Exempt proportion where annuity term dependent solely on duration of life

E1.546 Exempt proportion where annuity term dependent solely on duration of life

Where the amount of the annuity payment depends solely on the duration of a human life or lives, the same proportion (the exempt proportion) of each payment is exempt from income tax1.

Where the term of the annuity is solely dependent on the duration of a human life or lives, the exempt proportion is found by the formula2:

where:

  1.  

         AP is the annuity payment

  2.  

         PP is the purchase price of the annuity, and

  3.  

         AV is the actuarial value of the annuity payment.

For these purposes, the purchase price

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