Which term refers to the nontaxable portion of each annuity benefit payment?

The term that refers to the nontaxable portion of each annuity benefit payment is the cost base. The cost base represents the original amount that the annuity holder contributed, and since it is considered a return of the principal, this portion is not subject to income tax upon withdrawal or distribution.

In the context of annuities, the payments consist of two components: the return of the principal (the cost base) and earnings (the interest). While the principal is returned to the annuitant without any tax implications, the interest that is earned on the investments within the annuity is taxable when received. Understanding this distinction is crucial for individuals managing their tax liabilities related to annuity distributions.