Trans World Radio Canada - Gift Annuities

Gift Annuities

  • Do you own an investment such as a GIC, Bond, Mutual Fund or Stock?
  • Would you like to give some of it away but cannot because you need the income or security it provides?
  • Would you like to guarantee more of your income or your estate value and not see the value change from day to day?

If you answered yes to any of these questions you should consider a Gift Annuity.

A Gift Annuity pays you or you and your spouse a high guaranteed income for life, and it allows you to make a gift now to your favourite ministry. Upon your death, any remainder will be paid to your beneficiary. Gift Annuities can be set up to pay you an income of 3% to 7% depending on your age, the annuity interest rates at the time, and the terms of payment that you desire.

Here is an example.

This Annuity pays an income of 4% each year. Twenty thousand dollars is available to invest. This couple purchased this annuity July 2016.His age is 68 and she is 65 and their tax rate for charitable giving is 40%.

 

Annuity paying 4%

 

Amount given to TWR Canada

$20,000

Amount Invested In Annuity

$16,040

Gift to the ministry

$3,960

Income Paid each Year

$800

Less Income Tax

$24

Net Income Paid

$776

 

If you choose a 4% income and you gave TWR $20,000, we will use $16,040 to purchase an annuity to pay you a 4% return on the $20,000.  Your gift to the ministry of TWR will be $20,000 minus $16,040 which equals $3,960. You will receive a charitable gift tax receipt for the $3,960 which you can use to lower your income tax. You will receive the income of $800 per year for as long as you or your spouse is living. You or your spouse will not outlive the income.

If you both pass away before 10 years, TWR Canada will receive the balance of the payments up to the 10 year point.  You may have the option to choose a family member as the beneficiary.

Each year you would pay income tax of $24. Unlike most investments, most of the 4% income will go to you tax free. The annuity can pay a high percentage return because you are receiving interest plus some of your principal back each year.

In summary, you are giving $3,960 directly to the ministry AND receiving an income of 4% on an investment of $20,000. The annuity can be written to provide income to you for life, to you and your spouse for life or for a specific number of years.

Every effort has been made to insure the accuracy of the above information. Please consult our office or your advisor before taking action as regulations can change and may vary from province to province. (Last updated July 2016)