Annuity Taxation

Annuity Tax Rules and Information

annuity taxation
Figure 1. Annuity Taxation

How are annuities taxed in Canada?

Income from a registered annuity is fully taxable to the policyholder in the year it’s received. Income from a non-registered annuity can have prescribed or non-prescribed (accrual) tax treatment.

Portion of Annuity Payment Subject To Tax

  • Registered / Pension Funds
  • For annuities purchased with Registered or Pension funds, all income is 100 percent taxable.

  • Non-registered
  • For annuities purchased with non-registered funds, only the interest component of the payment is taxable.

Prescribed & Non-Prescribed Annuities

Ivon T Hughes

About the Author

Ivon T. Hughes

Ivon T Hughes is a leading expert on life annuities in Canada. His website LifeAnnuities.com has been a recognized authority on Canadian life annuities since 1972.

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