Accrued income is basically the interest earned or the increase in value since the last reporting of accrued income. In more technical terms, it is the Accumulating Fund less the Adjusted Cost Basis at the calculation date.
Accrued income is reported in Box 19 of the T5 tax slip and Box J - of the Relevé' 3 for Quebec.
Pre-1990 annuities
The Pre-1990 tax rules apply to non-registered deferred annuities purchased prior to January 1, 1990, unless ownership has been transferred after December 31, 1989. The pre-1990 tax status will be retained for most transfers of ownership between spouses.
- Accrued income is reported on a Calendar year basis - January 1 to December 31. Accrued income for Pre-1990 annuities must be reported at least every 3 years.
- Triennial reporting can be retained for Pre-1990 non-registered deferred annuities unless additional payments are made after December 31, 1989 or policyholder elects to report interest annually.
- Policyholders may elect, in writing, to have the accrued income reported every year. The written election is effective in the year the election is received by the life insurer.
- If a policyholder elects to have automatic withdrawals made on a monthly or annual basis, the annual reporting election must also be made.
- If a policyholder makes any payments to the annuity after December 31, 1989, accrued income must be reported annually.
*Reporting of accrued income does not apply to non-residents.
Post-1989 annuities
Anniversary reporting
- The post-1989 tax rules apply to non-registered deferred annuities purchased after December 31, 1989. This included transfers of ownership of pre-1990 annuities if a disposition occurred (excludes most transfers between spouses).
- Accrued income is calculated on an anniversary basis and must be reported to the policyholder annually.
- The calculation takes place the day before the anniversary. For example, if an AA is issued on June 15, 1992 - accrued income is calculated on June 14, 1993 and each year thereafter.
- If the transfer of ownership of a Post-1989 annuity triggers a disposition, the accrued income calculation date becomes the date the form E82 - Transfer of ownership is received at Head Office.
