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| Annuities |
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Deductible amount Where an annuity is purchased, the assessable amount of an annuity may be reduced by any deductible amount The deductible amount represents the undeducted purchase price of an annuity reduced by its residual capital value apportioned over the term of the annuity Undeducted Purchase Price The undeducted purchase price is essentially the amount paid in purchasing the annuity or to obtain the pension Residual Capital Value (RCV) The RCV of an annuity is the capital amount payable on termination of the annuity Not all annuities have a RCV Life Expectancy Table See MTG 11-510 for full table from age 35 to age 90
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| Annuity defined |
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An annuity is a fixed sum payable periodically either for a fixed period of time or for the rest of the recipient’s life An annuity may be:
Total undeducted purchase price - RCV Life expectancy at beginning of annuity period Alternatively, if an annuity is purchased for a fixed term of years, then the excluded portion is calculated as follows: Total undeducted purchase price - RCV Number of years in fixed term Life expectancy A person’s life expectancy is determined in accordance with the prescribed Life Tables prepared by the Australian Government Actuary. For an annuity or pension which first commenced to be paid on or after 1 January 2005, the life expectation factor is determined using the 2000 - 2002 Life Tables. Rebatable annuities and superannuation pensions A flat 15% rebate applies to recipients of:
Paid from a taxed source, and Received by taxpayers aged 55 years or more |