What's Annuity Income? 
Annuity income from an immediate or payout annuity is a blend of interest and return of principal . You can think of it as a mortgage in reverse . In Canada , if the annuity income is from a registered plan then it is fully taxable . Non registered income from an annuity can be taxed -LRB- the interest portion -RRB- either as earned or on a prescribed basis . If the annuity can qualify as a prescribed annuity the `` interest '' or the non return of capital portion is averaged over the expected duration of the contract . This often results in a much higher initial after tax income . Additional information on annuities and retirement plans can be found at www.protectandgrow.ca . If you have additional questions or feel that I could be of assistance , please do not hesitate to contact me . 