Section 146.5 — Income Tax Act: Definitions

The following definitions apply in this section. advanced life deferred annuity means a contract for an annuity that meets the following conditions: it is issued by a licensed annuities provider; it specifies that it is intended to qualify as an advanced life deferred annuity under this Act; periodic annuity payments under the contract commence to be paid no later than the end of the calendar year in which the annuitant attains 85 years of age, and are payable for the life of the annuitant or for the lives, jointly, of the annuitant and the annuitant’s spouse or common-law partner; periodic annuity payments under the contract are payable in equal amounts, or in amounts that are not equal only because the payments are adjusted in whole or in part to reflect increases in the Consumer Price Index, as published by Statistics Canada under the authority of the Statistics Act , or increases at a rate specified in the contract, not exceeding 2% per annum, or are reduced on the death of the annuitant or the annuitant’s spouse or common-law partner; if an annuity is payable for the lives, jointly, of the annuitant and the annuitant’s spouse or common-law partner and the annuitant dies before payments commence to be paid, then the payments to the annuitant’s spouse or common-law partner shall commence no later than the date that they would have commenced if the annuitant were alive, and be adjusted in accordance with generally accepted actuarial principles if the payments commence before the date they would have commenced if the annuitant were alive; the amount to be paid, if any, to one or more beneficiaries under the contract after the death of the annuitant — or, in the case of a joint-lives annuity, after the last death of the annuitant and the annuitant’s spouse or common-law partner — shall be paid as soon as practicable after the death of the annuitant or the last death of the annuitant and the annuitant’s spouse or common-law partner, as the case may be, and not exceed the amount, if any, by which the total amount transferred to acquire the annuity exceeds the total amount of annuity payments made under the contract; it provides that all or part of the amount transferred to acquire the annuity may be refunded, if the refund is paid to reduce the amount of tax that would otherwise be payable by the annuitant under Part XI, and the refund is paid to the annuitant, or transferred directly to the issuer of a registered retirement savings plan of the annuitant, the carrier of a registered retirement income fund of the annuitant, the administrator of a pooled registered pension plan under which the annuitant is a member, or the administrator of a money purchase provision of a registered pension plan under which the annuitant is a member; if it provides that the spouse or common-law partner may request a payment in a single amount in full or partial satisfaction of the spouse’s or common-law partner’s entitlement to payments described in subparagraph (c)(ii) as a consequence of the death of the annuitant, then the single amount cannot exceed the present value (at the time the single amount is paid) of the other payments that, as a consequence of the payment of the single amount, cease to be provided; no right under the contract is capable of being assigned, charged, anticipated, given as security or surrendered;

and it does not provide for any payment under the contract except as specified in this definition. ( rente viagère différée à un âge avancé ) annuitant means an individual who has acquired a contract for an annuity from a licensed annuities provider. ( rentier ) beneficiary , under a contract for 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 or common-law partner. ( bénéficiaire ) Amounts (excluding amounts described in paragraph (f) or (g) of the definition advanced life deferred annuity in subsection (1) and including amounts deemed to have been received under paragraph (7)(a)) received by a taxpayer in a taxation year under an advanced life deferred annuity shall be included in computing the income of the taxpayer for the taxation year. Amounts described in paragraph (f) of the definition advanced life deferred annuity in subsection (1) received by a taxpayer in a taxation year under an advanced life deferred annuity as a result of the death of an individual shall be included in computing the income of the taxpayer for the taxation year, if the taxpayer is the spouse or common-law partner of the individual, or a child or grandchild of the individual who was, immediately before the death of the individual, financially dependent on the individual for support; and the individual for the taxation year in which the individual died, in any other case. The amount of a refund described in clause (g)(ii)(A) of the definition advanced life deferred annuity in subsection (1) that is paid to an annuitant shall be included in the income of the annuitant. If an amount is paid in circumstances described in clause (g)(ii)(B) of the definition advanced life deferred annuity in subsection (1), the amount shall not, by reason only of that payment, be included by reason of paragraph 56(1)(z.5) in computing the income of any taxpayer; no deduction may be made under any provision of this Act in respect of the amount in computing the income of any taxpayer; in the case of an amount paid to a registered pension plan, the amount is deemed not to be a contribution for the purpose of applying Parts LXXXIII and LXXXV of the Income Tax Regulations ;

and in the case of an amount paid to a registered retirement savings plan or a pooled registered pension plan, the amount shall not be included in determining the amount of the individual’s undeducted RRSP premiums under subsection 204.2(1.2). An amount is deemed to have been received at a particular time by a beneficiary (as defined in subsection 108(1)) of a deceased annuitant’s estate, and not by the legal representative of the deceased annuitant, if the amount is described in paragraph (f) of the definition advanced life deferred annuity in subsection (1); the amount was paid to the legal representative; the beneficiary is described in paragraph (3)(a); the beneficiary is entitled to the amount in full or partial satisfaction of their rights as a beneficiary under the deceased annuitant’s estate; and the amount is designated jointly by the legal representative and the beneficiary in prescribed form filed with the Minister. If an amendment made at any time to a contract results in it no longer meeting the conditions in the definition advanced life deferred annuity in subsection (1), the following rules apply: the annuitant under the contract immediately before that time is deemed to have received under the contract at that time an amount equal to the fair market value of their interest in the contract at that time; and the annuitant is deemed to have acquired their interest in the contract at that time at a cost equal to the fair market value of the interest at that time.