Section 61 — Income Tax Act: Payment made as consideration for income-averaging annuity

In computing the income for a taxation year of an individual resident in Canada, there may be deducted an amount equal to the lesser of such amount as the individual may claim, not exceeding the total of amounts each of which is a single payment made by the individual in the year or within 60 days after the end of the year as consideration for an income-averaging annuity contract of the individual, and in respect of which no amount has been deducted in computing the individual’s income for the immediately preceding taxation year, and the amount, if any, by which the total of the remainder obtained when the total of the amounts deductible in computing the individual’s income for the year by reason of paragraphs 60(j) and 60(l) of this Act and paragraph 60(k) of the Income Tax Act , chapter 148 of the Revised Statutes of Canada, 1952, is deducted from the total of amounts described in subsection 61(2) in respect of the individual for the year, the amount, if any, by which the amount determined under paragraph 3(b) in respect of the individual for the year exceeds the total of amounts each of which is an allowable business investment loss of the individual for the year, the individual’s income for the year from the production of a literary, dramatic, musical or artistic work, the individual’s income for the year from the individual’s activities as an athlete, a musician or a public entertainer such as a theatre, motion picture, radio or television artist, and the amount, if any, by which the amount included in computing the income of the individual for the year by virtue of section 59 exceeds the total of amounts deducted in computing the individual’s income for the year under sections 64, 66, 66.1, 66.2 and 66.4 and under section 29 of the Income Tax Application Rules , exceeds the total of amounts each of which is the annual annuity amount of the individual in respect of an income-averaging annuity contract in respect of the consideration for which any amount has been deducted under this subsection in computing the individual’s income for the year. For the purposes of subsection 61(1), an amount described in this subsection in respect of an individual for a taxation year is any following amount: any single payment received by the individual in the year out of or under a superannuation or pension fund or plan on the death, withdrawal or retirement from employment of an employee or former employee, on the winding-up of the fund or plan in full satisfaction of all rights of the payee in or under the fund or plan, or to which the payee is entitled by virtue of an amendment to the plan although the payee continues to be an employee to whom the plan is applicable, on retirement as an employee in recognition of long service and not made out of or under a superannuation fund or plan, pursuant to an employees profit sharing plan in full satisfaction of all the individual’s rights in or under the plan, to the extent that the amount thereof is required to be included in computing the individual’s income for the year in which the payment was received, or pursuant to a deferred profit sharing plan on the death, withdrawal or retirement from employment of an employee or former employee, to the extent that the amount thereof is required to be included in computing the individual’s income for the year; a payment or payments made by an employer to the individual as an employee or former employee on or after retirement in respect of loss of office or employment, if made in the year of retirement or within one year after that year; a payment or payments paid to the individual as a death benefit, if paid in the year of death or within one year after that year; any amount included in computing the individual’s income for the year by virtue of subsection 146(8), to the extent that the amount is a refund of premiums, as defined by section 146, under a registered retirement savings plan received by the individual under the plan on or after the death of the person who was, immediately before the person’s death, the annuitant thereunder; any amount included in computing the individual’s income for the year by virtue of section 13, 14 or 23, subsection 28(4) or 28(5) or paragraph 106(2)(a) of this Act or subparagraph 56(1)(a)(viii) of the Income Tax Act , chapter 148 of the Revised Statutes of Canada, 1952; any amount deemed by section 7 to be a benefit received by the individual in the year by virtue of the individual’s employment; the amount, if any, by which any amount received by the individual in the year as or on account of a prize for achievement in a field of endeavour ordinarily carried on by the individual exceeds $500; any amount included in computing the individual’s income for the year by virtue of subsection 146.2(6) of the Income Tax Act , chapter 148 of the Revised Statutes of Canada, 1952; a payment made in the year to an individual by virtue of paragraph 51(2)(b) of the Judges Act ; except where the individual claimed a deduction under paragraph 23(3)(a) of the Income Tax Application Rules in computing the individual’s income for the year, any amount included in computing that income by virtue of paragraph 23(3)(c) of that Act; and where the individual ceased to be a member of a partnership in the year or the preceding year and paragraph 34(a) applied in computing the individual’s income therefrom in the preceding year, the amount included in the individual’s income for the year by virtue of paragraph 3(a) to the extent that, having regard to all the circumstances including the proportion in which the members of the partnership have agreed to share the profits of the partnership, it can reasonably be considered to be in respect of the individual’s share of the work in progress of the partnership at the time the individual ceased to be a member thereof, if, during the remainder of the year in which the individual ceased to be a member and in the following year, the individual did not become employed in the business that had been carried on by the partnership, carry on a business that is a profession, or become a member of a partnership that carries on a business that is a profession. In this section, annual annuity amount of an individual in respect of an income-averaging annuity contract means the total of the equal payments described in paragraph (c) of the definition income-averaging annuity contract in this subsection that, under the contract, are receivable by the individual in the twelve month period commencing on the day that the first such payment under the contract becomes receivable by the individual; ( montant annuel de la rente ) income-averaging annuity contract of an individual means a contract between the individual and a person licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada an annuities business or a corporation licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as trustee, under which in consideration of a qualifying payment as consideration under the contract, that person agrees to pay to the individual, commencing at a time not later than 10 months after the individual has made the qualifying payment, an annuity to the individual for the individual’s life, with or without a guaranteed term not exceeding the number of years that is the lesser of 15, and 85 minus the age of the individual at the time the annuity payments commence, or an annuity to the individual for a guaranteed term described in subparagraph (i), or in consideration of a single payment in respect of the individual’s 1981 taxation year, other than a qualifying payment, made by the individual as consideration under the contract, that person makes all payments provided for under the contract to the individual before 1983 and under which no payments are provided except the single payment by the individual and, in respect of a contract referred to in paragraph (a), equal annuity payments that are to be made annually or at more frequent periodic intervals, or in respect of a contract referred to in paragraph (b), payments described therein to the individual; ( contrat de rente à versements invariables ) qualifying payment means a single payment made before November 13, 1981 (or made on or after November 13, 1981 pursuant to an agreement in writing entered into before that date to make such a payment in respect of the individual’s 1981 taxation year, or pursuant to an arrangement in writing made before that date to have funds withheld before 1982 from any of the individual’s remuneration described in paragraph 61(1)(b) earned or received before November 13, 1981 and paid by or on behalf of the individual). ( paiement admissible )