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:
Whether Form T4A must be issued by a charity where the annuity payments made by the charity to the individual are not taxable.
Position:
Form T4A does not have be issued.
Reasons:
Although regulation 200(1) requires that Form T4A be issued in respect of annuity payments, where the annuity payment represents a return of capital and is therefore not taxable, it is not necessary to issue Form T4A.
5-962295
XXXXXXXXXX C. Chouinard
Attention: XXXXXXXXXX
July 22, 1996
Dear XXXXXXXXXX:
Re: Annuities Purchased From Charitable Organizations
This is in reply to your letter of June 24, 1996, wherein you requested confirmation of your assumption that a charity need not issue Form T4A to an individual who has purchased an annuity from the charity, where no portion of the annuity payment is taxable in the hands of the individual. This situation arises where, as noted in paragraph 3 of IT-111R2, an individual pays more to the charity for an annuity than the total amount that the individual can expect to receive from the charity as annuity payments. In such a situation, it is known or expected that the annuity payments will only be a return of capital.
We confirm that, in the situation described above, it would not be necessary for the charity to issue Form T4A.
We trust that these comments will be of assistance.
Yours truly,
R. Albert
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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