Source deductions of income tax

If you are a person authorized to offer an eligible income-averaging annuity and you pay an amount under such an annuity to a recognized artist, you must withhold income tax equal to 25.75% on the amounts paid and remit the amount to us within 30 days.

If you do not withhold 25.75%, or if you withhold less than 25.75% (for example, if you withhold 19% instead of 25.75%), you must pay us the difference yourself. However, you may recover the amount from the beneficiary.

Any amount you pay during the year from an eligible income-averaging annuity must be entered on the artist's RL-2 slip (see courtesy translation RL-2-T) that you file.

Eligible income-averaging annuity

An eligible income-averaging annuity is an income-averaging annuity established by agreement that meets the following requirements:

• The annuity is acquired through a single payment.
• The amounts provided for under the income-averaging annuity are paid in equal annual or more frequent periodic payments of sufficient amounts to ensure full payment of the annuity over no more than seven years from the date of the first payment.
• The first annuity payment is made no later than 10 months after the date of the single payment made to acquire the annuity.
• The artist is entitled to request full or partial commutation of the annuity at any time.
• The annuity can be paid only to the artist or, if that individual dies, to the artist's succession or designated beneficiary.
• The artist's interest in the contract cannot be disposed of other than by the surrender or cancellation of the annuity by the authorized person, except in the case of the artist's death.
• The artist's interest in the contract cannot be pledged or transferred as security in any manner whatsoever.
• The contract complies with the standard contract previously approved by us.