22 July 1996 Internal T.I. 9623497 - IT-111R2 - 1983 ANNUITY TABLE

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.

			July 22, 1996

	Vancouver Tax Services Office		HEADQUARTERS
	Client Assistance			C. Chouinard
			957-8953
Attention: King Yee
				7-962349

Annuities Purchased from Charitable Organizations

This is in response to your round trip memorandum of July 2, 1996, wherein you requested our comments regarding a taxpayer's queries concerning the 1983 Individual Annuity Mortality Table that appears in Interpretation Bulletin IT-111R2.

As noted by this taxpayer, the 1983 Individual Annuity Mortality Table contained in the 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, as regards 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 regards the taxpayer's request for the 1983 annuity mortality tables from Volume XXXIII of the Transactions of the Society of Actuaries, it is not clear to us which table he requires. 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 the above-mentioned publication. Copies of these tables can be obtained from Ms. Amy Crober, of the Charities Division, who can be reached at 613-954-2538.

R. Albert
for Director
Business and Publications Division
Income Tax Rulings and Interpretations Directorate
Policy and Legislation Branch