Per Income Tax Order 1975 (Amended in 2008), the following method applies to all annuity payments, and is effective from the July 2009 Annuity Payroll.
This tax computation method sums the pensioner's total income in a given month, regardless of whether such income is made up of annuity, annuity arrears, adhoc or prorata amounts, and tax is calculated on such total annualised income, using the following tax table:
Note:
The rebate is E7200 per annum for all persons under 60 and E9200 per annum for all persons over 60.
Example:
The income for a member for July 2009 is as follows:
- Annuity E3000
- Annuity Arrears (over 10 months) E30000
- Adhoc E2300
- Prorata E2000
- Total Income E37300
- Total Tax E10709
The total tax for this member is calculated as if the member earns E37300 per month, using the formula for calculating tax on annuity.
For more information on tax, refer to
Infrastructure
System Data
Tax Tables
Supplements
Calculation of Monthly PAYE for Annuities
Calculation of Monthly PAYE for Annuities
For details of scenarios where the payment start date has an influence in determining the tax period, therefore affecting the way in which tax is calculated, refer to
Supplements
Use of Payment Start Date for Annuity Tax Calculation