Commentary on Sections Overview Overview Section 725: Annual payments under immediate needs annuities
2787.This section is based on section 580C of ICTA. It exempts from income tax certain annual payments made under a contract for an immediate needs annuity.
2788.Subsections (2) and (3) define an immediate needs annuity. “Annuity” here refers to a contract, as is made clear in the section, rather than payments made or received. Because purchased life annuities payments have their own charge within this Act the definition of a “relevant annual payment” in section 580C(2) of ICTA which places these payments within Schedule D Case III or V can be omitted.