Income Tax Regulations (C.R.C., c. 945)

Regulations are current to 2017-11-20 and last amended on 2017-07-01. Previous Versions

Income from Participating Life Insurance Businesses

 For the purpose of subparagraph 309(1)(e)(i), in computing a life insurer’s income for a taxation year from its participating life insurance business carried on in Canada,

  • (a) there shall be included the amount determined by the formula

    A × B/C

    where

    A
    is the insurer’s gross Canadian life investment income (in this section as defined in subsection 2400(1)) for the year,
    B
    is the total of
    • (i) the insurer’s mean maximum tax actuarial reserve (in this section as defined in subsection 2400(1)) for the year in respect of participating life insurance policies in Canada, and

    • (ii) 1/2 of the total of

      • (A) all amounts on deposit with the insurer as at the end of the year in respect of policies described in subparagraph (i), and

      • (B) all amounts on deposit with the insurer as at the end of the immediately preceding taxation year in respect of policies described in subparagraph (i), and

    C
    the total of all amounts, each of which is
    • (i) the insurer’s mean maximum tax actuarial reserve for the year in respect of a class of life insurance policies in Canada, or

    • (ii) 1/2 of the total of

      • (A) all amounts on deposit with the insurer as at the end of the year in respect of a class of policies described in subparagraph (i), and

      • (B) all amounts on deposit with the insurer as at the end of the immediately preceding taxation year in respect of a class of policies described in subparagraph (i);

  • (b) there shall be included

    • (i) the insurer’s maximum tax actuarial reserve for the immediately preceding taxation year in respect of participating life insurance policies in Canada, and

    • (ii) the maximum amount deductible by the insurer under subparagraph 138(3)(a)(ii) of the Act in computing its income for the immediately preceding taxation year in respect of participating life insurance policies in Canada;

  • (c) there shall not be included any amount in respect of the insurer’s participating life insurance policies in Canada that was deducted under subparagraph 138(3)(a)(i) or (ii) of the Act in computing its income for the immediately preceding taxation year;

  • (d) subject to paragraph (a),

    • (i) there shall not be included any amount

      • (A) as a reserve that was deducted under paragraph 20(1)(l) of the Act in computing the insurer’s income for the immediately preceding taxation year, or

      • (B) that was included in determining the insurer’s gross Canadian life investment income for the year, and

    • (ii) no deduction shall be made in respect of any amount

      • (A) taken into account in determining the insurer’s gross Canadian life investment income for the year, or

      • (B) deductible under paragraph 20(1)(l) of the Act in computing the insurer’s income for the year;

  • (e) there shall be deducted

    • (i) the insurer’s maximum tax actuarial reserve for the year in respect of participating life insurance policies in Canada, and

    • (ii) the maximum amount deductible by the insurer under subparagraph 138(3)(a)(ii) of the Act in computing its income for the year in respect of participating life insurance policies in Canada;

  • (f) no deduction shall be made in respect of any amount deductible under subparagraph 138(3)(a)(iii) of the Act in computing the insurer’s income for the year;

  • (g) except as otherwise provided in paragraph (e), no deduction shall be made in respect of a reserve deductible under subparagraph 138(3)(a)(i) or (ii) of the Act in computing the insurer’s income for the year; and

  • (h) except as otherwise provided in this section, the provisions of the Act relating to the computation of income from a source shall apply.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. 2013, c. 34, s. 380.

Interpretation

 The following definitions apply for the purposes of this section and sections 300, 301 and 304 to 309.

adjusted purchase price

prix d’achat rajusté

adjusted purchase price, of a taxpayer’s interest in an annuity contract at any time, means, subject to subsections 300(3) and (4), the amount that would be determined at that time in respect of the interest under the definition adjusted cost basis in subsection 148(9) of the Act if the formula in that definition were read without reference to K. (prix d’achat rajusté)

amount payable

montant payable

amount payable has the same meaning as in subsection 138(12) of the Act. (montant payable)

benefit on death

prestation de décès

benefit on death has the same meaning as in subsection 1401(3). (prestation de décès)

cash surrender value

valeur de rachat

cash surrender value has the same meaning as in subsection 148(9) of the Act. (valeur de rachat)

coverage

protection

coverage, under a life insurance policy,

  • (a) for the purposes of section 306, means all life insurance (other than a fund value benefit) under the policy in respect of a specific life, or two or more specific lives jointly insured; and

  • (b) for the purposes of sections 307 and 308, has the same meaning as in subsection 1401(3). (protection)

endowment date

date d’échéance

endowment date, of an exemption test policy, means

  • (a) where the exemption test policy is issued in respect of a life insurance policy issued before 2017, the later of

    • (i) 10 years after the date of issue of the life insurance policy, and

    • (ii) the first policy anniversary that is on or after the day on which the individual whose life is insured under the life insurance policy would, if the individual survived, attain the age of 85 years, as defined under the terms of the policy; and

  • (b) where the exemption test policy is issued in respect of a coverage under a life insurance policy issued after 2016,

    • (i) if two or more lives are jointly insured under the coverage, the date that would be determined under subparagraph (ii) using the equivalent single age, determined on the coverage’s date of issue and in accordance with accepted actuarial principles and practices, that reasonably approximates the mortality rates of those lives, and

    • (ii) in any other case, the later of

      • (A) the earlier of

        • (I) 15 years after the date of issue of the exemption test policy, and

        • (II) the first policy anniversary that is on or after the day on which the individual whose life is insured under the coverage would, if the individual survived, attain the age of 105 years, as defined under the terms of the policy, and

      • (B) the first policy anniversary that is on or after the day on which the individual whose life is insured under the coverage would, if the individual survived, attain the age of 90 years, as defined under the terms of the policy. (date d’échéance)

fund value benefit

bénéfice au titre de la valeur du fonds

fund value benefit has the same meaning as in subsection 1401(3). (bénéfice au titre de la valeur du fonds)

fund value of a coverage

valeur du fonds d’une protection

fund value of a coverage has the same meaning as in subsection 1401(3). (valeur du fonds d’une protection)

pay period

période de paiement

pay period, of an exemption test policy, means

  • (a) where the exemption test policy is issued in respect of a life insurance policy issued before 2017,

    • (i) if on the date of issue of the exemption test policy, the individual whose life is insured has attained the age of 66 years, as defined under the terms of the policy, but not the age of 75 years, as defined under the terms of the policy, the period that starts on that date and that ends after the number of years obtained when the number of years by which the age of the individual exceeds 65 years, as defined under the terms of the policy, is subtracted from 20,

    • (ii) if on the date of issue of the exemption test policy, the individual whose life is insured has attained the age of 75 years, as defined under the terms of the policy, the 10-year period that starts on that date, and

    • (iii) in any other case, the 20-year period that starts on the date of issue of the exemption test policy; and

  • (b) where the exemption test policy is issued in respect of a coverage under a life insurance policy issued after 2016,

    • (i) subject to subparagraph (ii), if the individual whose life is insured under the coverage would, if the individual survived, attain the age of 105 years, as defined under the terms of the policy, within the eight-year period that starts on the date of issue of the exemption test policy, the period that starts on that date and that ends on the first policy anniversary that is on or after the day on which the individual would, if the individual survived, attain the age of 105 years, as defined under the terms of the policy,

    • (ii) if two or more lives are jointly insured under the coverage and an individual of an age equal to the equivalent single age on the date of the issue of the coverage would, if the individual survived, attain the age of 105 years, as defined under the terms of the policy, within the eight-year period that starts on the date of issue of the exemption test policy, the period that starts on that date and that ends on the first policy anniversary that is on or after the day on which the individual would, if the individual survived, attain the age of 105 years, as defined under the terms of the policy, and

    • (iii) in any other case, the eight-year period that starts on the date of issue of the exemption test policy. (période de paiement)

policy anniversary

anniversaire de la police

policy anniversary includes, in the case of a life insurance policy that is in existence throughout a calendar year and that would not otherwise have a policy anniversary for the calendar year, the end of the calendar year. (anniversaire de la police)

policy loan

avance sur police

policy loan has the same meaning as in subsection 148(9) of the Act. (avance sur police)

proceeds of the disposition

produit de la disposition

proceeds of the disposition has the same meaning as in subsection 148(9) of the Act. (produit de la disposition)

tax anniversary date

jour anniversaire d’imposition

tax anniversary date, in relation to an annuity contract, means the second anniversary date of the contract to occur after October 22, 1968. (jour anniversaire d’imposition)

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/83-865, s. 5;
  • SOR/94-686, s. 55(F);
  • SOR/2011-188, s. 14;
  • 2014, c. 39, s. 84.
 
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