I was beneficiary of death benefit from mothers annuity from USA. I can keep it in place for up to 5 years in her name. I can take distributions. How are these distributions recorded on my T1 ... does Canada tax me on the full amount I take out or just on the interest that has accrued?
There are many factors to consider here in determining if and how this particular annuity would be taxed in Canada. As a general rule, inheritances are "not taxable", only the interest or income you earn on it. However, there are quite a few rules regarding a US Inherited Annuity received by a Canadian beneficiary.
Once you have some more information on the type of plan the annuity comes from, if the distributions are being held in a trust or estate and if they are going to withhold tax on the distributions, it will be easier to advise you on the tax implications in Canada.
There is some great information in the following links describing different scenarios involving Foreign Inherited Annuities:
https://cbcsettlementfunding.com/annuities/types/inherited-annuity/
http://madanca.com/articles/entry/tax-on-foreign-inheritance-canada/
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