Annuity

The taxpayer had discretion as to when and in what amount to withdraw from her RRSP. Woods J found that the taxpayer's decision to make annual withdrawals did not bring the withdrawals under the definition of an "annuity," and therefore the taxpayer was ineligible for a pension tax credit based on the s. 118(7) definition of "pension income."

The taxpayer was assigned by his father an annuity paying $5,500 of interest annually and with an original term of 20 years. The taxpayer later surrendered the annuity to the issuer at a gain.

In finding that the lump sum received by the taxpayer was not taxable under s. 56(1)(d) (with the result that the taxpayer was subject to capital gains treatment) Mogan TCJ. stated (at p. 1148) that "in the workaday world, an annuity is an amount payable yearly" and that the definition of annuity in s. 248(1) only expanded this meaning "to include intervals longer or shorter than a year", and did not cover a large once-and-for all payment.

A lump sum payment in commutation of amounts owing under income-averaging annuity contracts did not constitute a payment under a "life annuity", which was defined inter alia for purposes of the 1942 Canada-U.S. Income Tax Convention as "a stated sum payable periodically at stated times during life."