Solving Your Financial Puzzle


Due Date: December 31, 2016

Due Date: December 31, 2016

Are you approaching retirement and need a source of guaranteed income?

Are you at the point where you would like to convert some of your variable assets/income into a predictable income stream?

Do you have GIC’s earning interest based on accrual taxation that could benefit from an income stream with prescribed taxation?

Changes to the Income Tax Act will require a change to the mortality tables being used to calculate the taxable portion of prescribed annuities. As a result, you will have an annuity payment on contracts purchased after January 1st, 2017.

Currently, life expectancy is based on 1971 individual annuity mortality tables for non-registered prescribed annuities. Starting January 1st, 2017, life expectancy for prescribed annuities will be based on the Annuity 2000 Basic Mortality Tables. The new tables include longer life expectancies – this reduces the portion of each payment that will be treated as a return of capital because the principle portion has to be spread over more years.

What this means for you:

A larger portion of the payment will be taxable. The change will not affect client’s total payment.

All annuity contracts purchased before January 1st, 2017 will follow the old mortality tables and taxable portion will not change.

Please keep in mind this information is general in nature and if you require or would like to receive more specific information to your needs, please contact us as we are always available to help.