Part 6Exempt income
Chapter 7Purchased life annuity payments
Partial exemption for purchased life annuity payments
719Extent of exemption under section 717
1
This section sets out the rules for determining the extent to which an annuity payment is within the exemption in section 717(1).
2
The rules depend on—
a
whether or not the amount of the annuity payments under the annuity depends solely on the duration of a human life or lives (see subsections (3) to (5)), and
b
whether or not the annuity's term depends solely on the duration of a human life or lives (see subsections (6) to (8)).
3
If the amount of the annuity payments depends solely on the duration of a human life or lives, the same proportion of each payment (“the exempt proportion”) is exempt.
4
But if the amount of the annuity payments also depends on another contingency, each payment is exempt so far as it does not exceed a fixed sum (“the exempt sum”).
5
If an annuity payment within subsection (4) is less than the exempt sum, the shortfall is added to the exempt sum for the next payment (and so on).
6
The ways to determine the exempt proportion and the exempt sum differ according to whether or not the annuity's term depends solely on the duration of a human life or lives.
7
If the annuity's term depends solely on the duration of a human life or lives—
a
the exempt proportion is determined as set out in section 720, and
b
the exempt sum is determined as set out in section 721.
8
If the annuity's term also depends on another contingency—
a
the exempt proportion is the proportion which is just and reasonable, having regard to the contingencies affecting the annuity and to section 720, and
b
the exempt sum is the amount which is just and reasonable, having regard to the contingencies affecting the annuity and to section 721.