Page 31 - F6 Slide - Taxation - Lecture Day 2 Class
P. 31

Purchased Annuity







          • The capital portion is exempt for tax purposes.




          • How do we determine the capital portion?



          • We use the following formula=A/B*C




          • A=Lump sum paid by the purchaser.




          • B=Total expected return




          • C=The annuity.













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