Question:
Dear Ms Josias In the case of having 1 living annuities pay out every month and the 2nd one once a year (taken the figure from the previous year), will income tax be deducted according to the pay out in that month, or on the assumed income for the whole year less rebates divided by 12 month. Keeping in mind that the yearly amount can be less or more money, or can be changed into a monthly pay out again. Looking forward to hear your answer Kind Regards Hans Longwitz
Answer:
Hans, Apologies for the delayed response. Your tax is deducted based on the income you have chosen to receive for the year. You can only choose your income, and the how you want to receive this income (ie monthly or quarterly or annually) once per year (at your policy anniversary date). So your tax liability is determined in advance, and deducted accordingly. A problem may arise when you have two living annuities, with two different providers. Your combined income may push you in a higher tax bracket, then the ones applied separately to the two incomes. This would mean that you have to pay in tax at year end.
