8 October 1996 External T.I. 9625905 - INTERPRETATION BULLETIN IT-111R2

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

How to interpret the 1983 Annuity Mortality Table in IT-111R2, given that it is incorrect.

Position:

For every age, must use the number of yearly instalments expected of next following age.

Reasons:

The age associated with the number of yearly instalments is out by one year for all ages of males and females.

XXXXXXXXXX							5-962590

October 8, 1996

Dear Sirs:

Re: Interpretation Bulletin IT-111R2

This is in reply to your letter of July 25, 1996 in which you have requested information regarding the life expectancy tables contained in Interpretation Bulletin IT-111R2.

As noted in your letter, we are aware that the 1983 Annuity Mortality Table contained in the above noted Bulletin is incorrect. The age associated with the number of yearly instalments is out by one year for all ages of males and females. For example, a male who is 10 years old at December 31 of the year payments begin is said to be able to expect 70.2 yearly instalments. The correct number of instalments should be 69.2, that is, the number associated with a male who is 11 years old at December 31 of the year payments begin. Therefore, with respect to the example in paragraph 6(a) of the Bulletin, it applies to a male of 80 years of age, rather than 81 years of age.

A revision to IT-111R2 is currently in process to clarify that the 1983 Individual Annuity Mortality Table is to be used to determine if a gift has been made and in circumstances where a gift has not been made, the 1971 Individual Annuity Mortality Table is to be used in determining the capital element of the payment for purposes of the deduction under paragraph 60(a) of the Income Tax Act. The revision is also intended to correct the error in the 1983 Individual Annuity Mortality Table that is attached to the Bulletin.

As indicated in paragraph 4 of the Bulletin, the table which appears in the Bulletin is to be used for immediate life annuities for one annuitant. For joint life and survivorship charitable gift annuities and charitable gift annuities with guaranteed periods, reference should be made to the appropriate 1983 annuity mortality table in Volume XXXIII of the Transactions of the Society of Actuaries. Copies of these tables may be obtained from the Charities Division, who can be reached at 613-954-2538.

We trust our comments will be of assistance to you.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch