No liability to income tax arises under Chapter 7 of Part 4 in respect of so much of an annuity payment made under a purchased life annuity as is within this subsection in accordance with section 719 (extent of exemption).

Subsection (1) is subject to section 718.

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In this Chapter “purchased life annuity” has the same meaning as in Chapter 7 of Part 4 (see section 423).