brief to the Ontario government's Subcommittee on ... - ACTRA Toronto

Tax treatment of amounts received under an eligible incomeaveraging
annuity
Amounts from an eligible income-averaging annuity will be considered as
income and subject <strong>to</strong> a special tax.
The expression “amount from an eligible income-averaging annuity” means:
— a periodic amount received under an eligible income-averaging
annuity contract;
— an amount received as payment for full or partial commutation of <strong>the</strong>
eligible income-averaging annuity;
— an amount received as proceeds of disposition following <strong>the</strong>
surrender or cancellation of <strong>the</strong> eligible income-averaging annuity by
<strong>the</strong> authorized person party <strong>to</strong> <strong>the</strong> annuity contract.
• Special tax
A special tax applicable <strong>to</strong> any amount paid under an eligible income-averaging
annuity contract will be introduced.
More specifically, a taxpayer who receives an amount from an eligible
income-averaging annuity during a given taxation year must pay, for <strong>the</strong> year,
income tax equal <strong>to</strong> 24% of <strong>the</strong> amount so received.
An authorized person who pays an amount from an eligible income-averaging
annuity must withhold this special tax. That person must remit <strong>the</strong> amounts
thus withheld <strong>to</strong> <strong>the</strong> Minister of Revenue, on behalf of <strong>the</strong> taxpayer required <strong>to</strong>
pay <strong>the</strong> tax, no later than 30 days following <strong>the</strong> date of <strong>the</strong> payment under an
eligible income-averaging annuity.
The authorized person must pay <strong>to</strong> <strong>the</strong> Minister of Revenue, on behalf of <strong>the</strong>
taxpayer, any portion of <strong>the</strong> income tax payable by <strong>the</strong> taxpayer that was not
withheld at source upon <strong>the</strong> payment of <strong>the</strong> amount from an eligible income-averaging
annuity. However, <strong>the</strong> authorized person may recover from <strong>the</strong>
taxpayer <strong>the</strong> amount of income tax thus paid
Fur<strong>the</strong>rmore, an authorized person will be required <strong>to</strong> file an information
return with <strong>the</strong> Minister of Revenue, on a prescribed form, regarding any
payment made by <strong>the</strong> person under an eligible income-averaging annuity
during a given calendar year. The information return must be filed no later
than <strong>the</strong> last day of February each year regarding <strong>the</strong> preceding calendar
year.
• Personal income tax
Taxpayers must include, in <strong>the</strong> calculation of <strong>the</strong>ir income for a given taxation
year, any amount from an eligible income-averaging annuity received during
ACTRA Toron<strong>to</strong> Performers
Brief <strong>to</strong> <strong>the</strong> Status of <strong>the</strong> Artist <strong>Subcommittee</strong> 24