Through its Gift Annuity plans, The Salvation Army offers you the opportunity to share in its work of changing lives for the better, while at the same time ensuring your own security.
GIFT ANNUITY PLAN
A Gift Annuity Plan involves an investment and a gift. Its form is simple, but its impact is profound.This gift plan provides you with an income for life, plus provisions for a gift to the work of The Salvation Army.
Your gift will benefit the work of The Salvation Army such as emergency shelters, food, counselling, family services, camps for the underprivileged, prison ministries, hospitals, treatment centres for addicts, hospices for the terminally ill, retraining centres, homes for psychiatric patients, chaplaincy services, worship and community centres. Through The Salvation Army, you truly touch your community where the needs are the greatest.
Also, your gift provides you with a fixed income for life, at a rate which is usually above GIC rates. This income is backed by a full guarantee of The Salvation Army in Canada, and is more than fully covered by its investment reserve.
Further, only part of this income is taxable, and donors also get a tax receipt for part of the amount paid.Your gift also has the advantage that it avoids probate taxes to your estate upon death. Your gift has already been made, and thus is not included in any probate calculations.
SECURITY AND OPPORTUNITY
A Salvation Army Charitable Gift Annuity is a combination of security and opportunity.It has features which may contribute to helping you live with a secure, and possibly higher pre and post tax income. Thus it offers both security, income, and an opportunity.
The real opportunity lies in the ability to make a difference; to contribute to the values of love and caring which are characteristics of our communities, and which enhance our quality of life. Through your gift you are making a difference in your community, helping make it a better place for yourself, your loved ones, and those in need.
THE NEXT STEP
To investigate these or to obtain more information on gift planning, please complete the online form, or contact us by phone or e-mail (click for contact information), and we will send information or arrange for a qualified representative to contact you.
FAQ’S
What is a Charitable Gift Annuity (CGA)?
A Charitable Gift Annuity is a combination of a gift to The Salvation Army, and a contract wherein The Salvation Army agrees to pay the donor an income for that person’s lifetime.It is partly a gift, as The Salvation Army pays less than a commercial annuity of this kind would pay.Further, any capital left when the person dies goes to The Salvation Army to support its charitable programs.
Why does the rate paid vary from person to person?
The Salvation Army, as with most charitable annuity issuers, sets its rates so that a target gift amount should be left at the time the person dies.This is according to the guidelines set out by the Canadian Association on Charitable Gifts, the association of Charitable Gift Annuity issuers.Obviously, the age and gender of the donor will impact their life expectancy, and therefore what The Salvation Army can pay.This is true of all annuities.
Would my payment vary over time?
No, your payment is fixed for life, at the time the agreement is entered into, as are the tax consequences of each payment.
What is the tax treatment of the payment?
The tax treatment of the income from a Salvation Army Charitable Gift Annuity is set out in the Income Tax Act, and Regulations.Those interested in checking further should go to the CCRA web site, and download the Income Tax Bulletin, IT 111R2 and R2SR.In brief, Charitable Gift Annuities are what are called “prescribed annuities” under the Income Tax Act.This means that the tax treatment of the income is calculated at the outset, using the life expectancy of the donor, from the 1971 Insurance Industry life expectancy tables.The income for tax purposes is treated as a blend of return of capital, and taxable income, in a constant ratio.The ratio is determined by comparing the amount expected to be paid out over the life of the annuity, to the premium paid for it.If, for instance, the expected annuity payments total less than the amount paid, then the income is entirely tax free.If the payments will amount to 150% of the amount paid, then the amount of each payment that would be taxable would be the extra 50% divided by the 150%, or one third.
How is the amount of the receipt determined?
This is determined by the rules set out by the CCRA (Canada Customs and Revenue Agency). The premium paid for the Gift Annuity is compared to that which would be paid for a commercial prescribed annuity paying the same dollar amount. The difference between the two figures is the amount thet The Salvation Army can receipt.
What are the risks of investing in a CGA?
The risks are basically twofold.First, there is the fact that your capital is no longer available to you, only the income stream.As these are life annuities with no guarantee period, you will continue to receive payments even if you long outlive the insurance industry tables age.However, if you die before that, your estate will receive no payments.If you have a joint annuity, the payments would, at the time of your death, switch to the other annuitant until that person’s death, but end at that point.
The second risk is whether The Salvation Army can continue to make the payments over the years.Your protection is twofold.First, that The Salvation Army does retain the funds, and invests them, and keeps a surplus on reserve to meet its actuarial obligations.Every three years an independent actuary assesses the program, and as of the last assessment, as of December 2000, The Salvation Army had a 25% surplus to meet its obligations.Secondly, the obligation to pay is not just backed by the reserve, but by the total assets and the total credit of The Salvation Army in Canada, which is considerably larger than the annuity program.However, there is no government or commercial insurance backing most of these annuities.
What kind of annuities does The Salvation Army offer?
The Salvation Army offers single and joint life annuities, with no guarantee periods.
Who can I have a joint annuity with?
Who can share a joint annuity is determined by the Income Tax Act and regulations.Basically, you can have a joint annuity with any one of your spouse, a brother or a sister.
Who is a CGA really suited for?
A Salvation Army Charitable Gift Annuity is really suited for an older person (our minimum age is 60), who wants a high, guaranteed tax sheltered (or partially sheltered) income.The right person must be aware that their capital, once invested, will not go to their estate, or their family (other than a joint annuitant who will receive income).Rather it will go to The Salvation Army for its charitable programs.The guaranteed high tax sheltered income is very attractive to many people, but offsetting that is the inability to leave that money to family.Further, the capital is no longer available, so it cannot be used for major purchases in the future.
For Further Questions…
Contact us by phone at 1-800-725-2769 or by e-mail at donor_questions@salvationarmy.org . We will send you the information you need or arrange for a qualified representative to contact you.
