A gift annuity is a type of investment that allows someone to make a significant contribution to a charity and then receive tax benefits and a guaranteed annual payment at a level that typically exceeds the rate of return on a GIC. Gift annuities provide a steady stream of mostly tax-free income for as long as you live. At the end of your life any balance remaining in an annuity investment will go to support the mission of your designated charity.

For many people, an investment in a gift annuity is a wise method to balance their retirement income. RRIFs and other investments will rise and fall with the markets. Income from a gift annuity is guaranteed for your lifetime. It will never run out.

The information listed below is for self-insured gift annuities issued by Catholic Missions In Canada. CMIC does not issue charitable annuities re-insured through a financial institution. They are structured differently and the benefits are different.

Here are six benefits of a charitable gift annuity:

1. Attractive Rates

Compare gift annuity rates with what you might receive from a GIC or bank deposit. At Catholic Missions In Canada, the annuity rate for a 70-year-old male is 4.71 per cent; at age 80, 6.14 per cent, and for 90-year-old males, the rate is 8.69 per cent. (Rates for females and joint annuitants are slightly lower.)

Or consider this: A $100,000 gift annuity provides Gerald, aged 80, with $6,140.00 income each year ($511.67 each month) — 100- per-cent tax-free — and a charitable receipt for approximately $37,000.

Charles and Susan, ages 86 and 84, receive a joint rate of 5.83 per cent. A $30,000 annuity provides them with $1,749 tax-free each year and a charitable receipt for approximately $8,500.

To put it in perspective, if Gerald or Charles and Susan invested in a GIC, their income would be fully taxable and there would be no charitable receipt.

2. Relief From Taxes

Since part of all contributions for a gift annuity is considered a charitable gift by Canada Revenue Agency, you will receive a charitable receipt for a portion of your investment (20 per cent or higher) to apply on your income tax return. Receipts can be used in the year issued and any unused portion can be carried forward for up to five consecutive years until your credit is fully used. This could provide tax-savings for several years. Also, in the illustrations above, their annuity income is 100-per-cent tax-free.

3. Regular Payments

When you establish your gift annuity, you decide how often you want to receive your payments: monthly, quarterly, semi-annually, or annually. Whatever you choose, receiving your payments on a specific, predetermined date is comforting and helpful for planning.

4. Lifetime Benefit

Gift annuities are for life, and no matter how long you live, your payments continue to the end of your life. If you have a joint gift annuity, when one person dies, the other will continue to receive the same amount for the rest of his/ her life providing security for both of you.

5. You support charity

At the end of your life, any amount remaining of your annuity will be used to fund charitable causes, such as Catholic Missions In Canada missionaries. A leader in this field, CMIC has been issuing gift annuities since 1952, allowing our missionaries to share the Word of God in some of the poorest Catholic missions across Canada.

6. Simple Process

With your date(s) of birth and the amount you wish to invest in an annuity, you can receive a personalized no-obligation illustration showing how it all works, information you can share with your family or advisors.

To receive an annuity illustration from CMIC, you may contact me at (416) 934-3424 or e-mail winnie@cmic.info. When you are ready to begin your annuity, fill in your application form and mail to us with your cheque, and your payments will begin. Let the six benefits speak for themselves.

(Winnie Quinn is Charitable Gifts Manager at Catholic Missions In Canada.)