| Tax event | Treatment |
|---|---|
| Annual income allocation | T3 slip; taxable in year allocated even if not distributed |
| Capital gains inside fund | Flow through at 50% inclusion rate (capital gains treatment) |
| Canadian dividends | Eligible for dividend tax credit |
| Surrender / maturity | Capital gain or loss (proceeds minus ACB) |
| Guarantee top-up at maturity | Capital transaction; entire payout is proceeds of disposition |
| Death of annuitant | Deemed disposition at FMV on final return; death benefit not income to beneficiary |
- ITA authority: s. 138.1 -- creates the related segregated fund trust
- Tax slip: T3 (same slip type as mutual fund trusts)
- Registered accounts (RRSP/RRIF): full income inclusion on withdrawal (RRSP rules apply, not s. 138.1 non-registered rules)
- TFSA: proceeds tax-free