I-3 - Taxation Act

Section 965.0.38 Disposition versions

2022-06-08

965.0.38. In this Title,

“advanced life deferred annuity” means a contract for the constitution of an annuity in respect of which the following conditions are met:

(a)  it is issued by a licensed annuities provider;

(b)  it specifies that it has been set up with the intention that it serve as an advanced life deferred annuity for the purposes of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.));

(c)  it provides for periodic annuity payments that

i.  commence to be paid no later than the end of the calendar year in which the annuitant attains 85 years of age, and

ii.  are payable for the life of the annuitant or, where the annuity is constituted for the benefit of the annuitant and the annuitant’s spouse jointly, for the life of the annuitant and, on the annuitant’s death, for the life of the spouse;

(d)  it provides that periodic annuity payments are payable in equal amounts, or in amounts that are not equal only because

i.  the payments are adjusted in whole or in part to reflect

(1)  increases in the Consumer Price Index, as published by Statistics Canada under the Statistics Act (R.S.C. 1985, c. S-19), or

(2)  increases at a rate specified in the contract, not exceeding 2% per year, or

ii.  the payments are reduced on the death of the annuitant or the death of the annuitant’s spouse;

(e)  where the annuity is constituted for the benefit of the annuitant and the annuitant’s spouse jointly and the annuitant dies before payments commence to be paid, it provides that the payments to the spouse must

i.  commence to be paid no later than the date that they would have commenced to be paid if the annuitant were alive, and

ii.  be adjusted in accordance with generally accepted actuarial principles if the payments commence to be paid before the date they would have commenced to be paid if the annuitant were alive;

(f)  it provides that the amount to be paid, if any, to one or more beneficiaries under the contract after the death of the annuitant — or, if the annuity is constituted for the benefit of the annuitant and the annuitant’s spouse jointly and the spouse outlives the annuitant, after the death of the spouse — must

i.  be paid as soon as practicable after the death of the annuitant or the death of the annuitant’s spouse, as the case may be, and

ii.  be equal to or less than the amount, if any, by which the total amount transferred to acquire the annuity exceeds the aggregate of all amounts each of which is an annuity payment made under the contract;

(g)  it provides that an amount transferred to acquire the annuity may be refunded, in whole or in part, provided that the refund is paid to reduce the amount of tax that would otherwise be payable by the annuitant under Part XI of the Income Tax Act and that

i.  the refund is paid to the annuitant, or

ii.  the refund is transferred directly to

(1)  the issuer, within the meaning of paragraph c of section 905.1, of a registered retirement savings plan of the annuitant,

(2)  the carrier, within the meaning of paragraph b of section 961.1.5, of a registered retirement income fund of the annuitant,

(3)  the administrator, within the meaning of section 965.0.19, of a pooled registered pension plan under which the annuitant is a member, within the meaning of that section, or

(4)  the administrator of a money purchase provision, within the meaning of section 965.0.1, of a registered pension plan under which the annuitant is a member, within the meaning of that section;

(h)  if it provides that the spouse may request a payment in a single amount in full or partial satisfaction of the spouse’s entitlement to payments described in subparagraph ii of paragraph c as a consequence of the death of the annuitant, the single amount must not exceed the present value (at the time it is paid) of the other payments that, because of the payment of that single amount, cease to be provided;

(i)  it provides that no right under the contract may be surrendered, assigned, charged, anticipated or given as security; and

(j)  it does not provide for any payment except as provided for in this definition;

“annuitant” means an individual who has acquired a contract for the constitution of an annuity from a licensed annuities provider;

“beneficiary”, under a contract for the constitution of an annuity, means an individual who has a right under the contract to receive a payment after the death of the annuitant or the annuitant’s spouse.

2022, c. 23, s. 88.