Commentary

E1.547 Exempt sum where annuity term dependent solely on duration of a life

Personal and employment tax

E1.547 Exempt sum where annuity term dependent solely on duration of a life

E1.547 Exempt sum where annuity term dependent solely on duration of a life

Where the amount of the annuity payments depends on another contingency, rather than just on the duration of a human life or lives, it is a fixed amount, the exempt sum, that is exempt from income tax1.

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

where:

  1.  

         PP is the purchase price of the annuity

  2.  

         TY is the expected term of the annuity in years, and any odd fraction of

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