asked the Minister for Finance whether he is aware that the major portion of the annual payment on a life annuity consists of repaid capital, but that, in spite of this, it is the practice of the revenue authorities to treat the whole of the annuity as income and to subject it to the full current rate of income-tax; that the existing low interest rates and the high cost of living increase the difficulties, occasioned by this inequitable practice, to those who are dependent in their old age on their capital savings; and if he will take steps to see that repaid capital sums will, in such cases, not be subject to income-tax.
Ceisteanna—Questions. Oral Answers. - Income-Tax on Life Annuities.
It is long established law that when a person purchases a life annuity the annual payments he receives are not capital but income and that as income they are chargeable under the Income Tax Acts. The assumption upon which the question rests is accordingly not sustainable.
Is the Minister satisfied, nevertheless, that it is a hardship on people who have employed their life savings in such a manner that there should be a discrimination between those who have invested their money in a life annuity and those who did not invest it at all and, therefore, had not to pay tax?
No, I am not satisfied.