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

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Regulations are current to 2022-09-22 and last amended on 2022-06-23. Previous Versions

PART XXVIIGroup Term Life Insurance Benefits (continued)

Term Insurance Benefit

Amount of Benefit

  •  (1) Subject to section 2704, for the purpose of paragraph 2701(1)(a), a taxpayer’s term insurance benefit under a group term life insurance policy for a calendar year is

    • (a) where

      • (i) the policyholder elects to determine, under this paragraph, the term insurance benefit for the year of each individual whose life is insured under the policy,

      • (ii) no premium rate that applies for term insurance provided under the policy on the life of an individual in respect of the year depends on the age or sex of the individual,

      • (iii) no amounts are payable under the policy for term insurance on the lives of individuals in respect of the year other than premiums payable on a regular basis that are based on the amount of term insurance in force in the year for each individual, and

      • (iv) the year is after 1995,

      the amount determined by the formula

      A - B

      where

      A
      is the total of the premiums payable for term insurance provided under the policy on the taxpayer’s life in respect of periods in the year, to the extent that each such premium is in respect of term insurance that, if the taxpayer died in the year, would be paid to or for the benefit of the taxpayer or as a benefit that the taxpayer desired to have conferred on any person, and
      B
      is the total amount paid by the taxpayer in respect of term insurance under the policy on the taxpayer’s life in respect of the year; and
    • (b) in any other case, the amount, if any, by which

      • (i) the total of all amounts each of which is, for a day in the year on which term insurance is in effect under the policy on the taxpayer’s life, the amount determined by the formula

        A × B

        where

        A
        is the amount of term insurance in effect on that day under the policy on the taxpayer’s life, except the portion, if any, of the amount that, if the taxpayer were to die on that day, would be paid otherwise than
        • (A) to the taxpayer,

        • (B) to benefit of the taxpayer, or

        • (C) as a benefit that the taxpayer desired to have conferred on any person, and

        B
        is the average daily cost of insurance for the year for the premium category in which the taxpayer is included on that day

      exceeds

      • (ii) the total amount paid by the taxpayer in respect of term insurance under the policy on the taxpayer’s life in respect of the year.

Average Daily Cost of Insurance
  • (2) The average daily cost of insurance under a group term life insurance policy for a calendar year for a premium category is

    • (a) subject to paragraph (b), the amount determined by the formula

      (A + B - C) / D

      where

      A
      is the total of the premiums payable for term insurance provided under the policy on the lives of individuals in respect of periods in the year while they are in the premium category,
      B
      is the total of the amounts paid in the year under the policy for term insurance in respect of periods in preceding years (other than amounts that have otherwise been taken into account for the purpose of subsection 6(4) of the Act), to the extent that the total can reasonably be considered to relate to term insurance provided on the lives of individuals in the premium category,
      C
      is the total amount of policy dividends and experience rating refunds paid in the year under the policy and not distributed to individuals whose lives are insured under the policy, to the extent that the total can reasonably be considered to relate to term insurance provided on the lives of individuals in the premium category, and
      D
      is the total of all amounts each of which is the amount of term insurance in force on a day in the year on the lives of individuals in the premium category on that day; or
    • (b) the amount that the policyholder determines using a reasonable method that is substantially similar to the method set out in paragraph (a).

Survivor Income Benefits
  • (3) For the purposes of this section, where the proceeds of term insurance on the life of an individual are payable in the form of periodic payments, and the periodic payments are not an optional form of settlement of a lump-sum amount, the amount of term insurance in effect on the individual’s life on any day is the present value, on that day, of the periodic payments that would be made if the individual were to die on that day.

Determination of Present Value
  • (4) For the purpose of subsection (3), the present value on a day in a calendar year

    • (a) shall be determined using assumptions that are reasonable at some time in the year; and

    • (b) may be determined assuming that an individual on whose life the present value depends is the same age on that day as on another day in the year.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/97-494, s. 1

Prepaid Insurance Benefit

Amount of Benefit

  •  (1) Subject to section 2704, for the purpose of paragraph 2701(1)(b), a taxpayer’s prepaid insurance benefit under a group term life insurance policy for a calendar year is

    • (a) where the taxpayer is alive at the end of the year, the total of all amounts each of which is

      • (i) a lump-sum premium (other than the taxpayer portion) paid in the year and after February 1994 in respect of insurance under the policy on the life of the taxpayer, other than a paid-up premium paid before 1997, or

      • (ii) 1/3 of a paid-up premium (other than the taxpayer portion) in respect of insurance under the policy on the life of the taxpayer that was paid

        • (A) after February 1994 and before 1997, and

        • (B) in the year or one of the two preceding years; and

    • (b) where the taxpayer died after June 1994 and in the year, the amount, if any, by which

      • (i) the total of all amounts each of which is a lump-sum premium (other than the taxpayer portion) paid under the policy after February 1994 in respect of insurance on the life of the taxpayer

      exceeds

      • (ii) the portion of that total that was included in computing the taxpayer’s prepaid insurance benefit under the policy for preceding years.

Taxpayer Portion of Premiums
  • (2) For the purpose of subsection (1), the taxpayer portion of a premium is the portion, if any, of the premium that the taxpayer paid, either directly or by way of reimbursement.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/97-494, s. 1

Employee-Paid Insurance

  •  (1) For the purpose of subsection 2701(1), where the full cost of insurance under a group term life insurance policy in a calendar year is borne by the individuals whose lives are insured under the policy, each individual’s term insurance benefit and prepaid insurance benefit under the policy for the year is deemed to be nil.

  • (2) Where the premiums for part of the life insurance (in this subsection referred to as the “additional insurance”) under a group term life insurance policy are determined separately from the premiums for the rest of the life insurance under the policy, and it is reasonable to consider that the individuals on whose lives the additional insurance is provided bear the full cost of the additional insurance, the additional insurance, the premiums, policy dividends and experience rating refunds in respect of that insurance, and the amounts paid in respect of that insurance by the individuals whose lives are insured, shall not be taken into account for the purposes of this Part.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/97-494, s. 1

Prescribed Premium and Insurance

 For the purpose of subsection 6(4) of the Act, as it applies to insurance provided in respect of periods that are in 1994 and before July 1994,

  • (a) a lump-sum premium paid under a group term life insurance policy after February 1994 in respect of an individual who is alive at the end of June 1994 is a prescribed premium; and

  • (b) insurance in respect of which a premium referred to in paragraph (a) is paid is prescribed insurance.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/97-494, s. 1

PART XXVIIIElections in Respect of Accumulating Incomes of Trusts

  •  (1) Any election under subsection 104(14) of the Act in respect of a taxation year shall be made by filing with the Minister a written statement

    • (a) in which the election in respect of the year is made;

    • (b) in which is designated the part of the accumulating income in respect of which the election is being made; and

    • (c) that is signed by the preferred beneficiary and a trustee having the authority to make the election.

  • (2) The statement shall be filed within 90 days after the end of the trust’s taxation year in respect of which the election referred to in subsection (1) is made.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/2001-164, s. 1
  • SOR/2007-116, s. 8

PART XXIXScientific Research and Experimental Development

Interpretation

  •  (1) [Repealed, SOR/2000-296, s. 1]

  • (2) For the purposes of clause 37(8)(a)(i)(B) and subclause 37(8)(a)(ii)(A)(II) of the Act, the following expenditures are directly attributable to the prosecution of scientific research and experimental development:

    • (a) the cost of materials consumed or transformed in such prosecution;

    • (b) where an employee directly undertakes, supervises or supports such prosecution, the portion of the amount incurred for salary or wages of the employee that can reasonably be considered to be in respect of such prosecution; and

    • (c) other expenditures, or those portions of other expenditures, that are directly related to such prosecution and that would not have been incurred if such prosecution had not occurred.

  • (3) For the purposes of subclause 37(8)(a)(ii)(A)(II) of the Act, the following expenditures are directly attributable to the provision of premises, facilities or equipment for the prosecution of scientific research and experimental development:

    • (a) the cost of the maintenance and upkeep of such premises, facilities or equipment; and

    • (b) other expenditures, or those portions of other expenditures, that are directly related to that provision and that would not have been incurred if those premises or facilities or that equipment had not existed.

  • (4) For the purposes of the definition qualified expenditure in subsection 127(9) of the Act, the prescribed proxy amount of a taxpayer for a taxation year, in respect of a business, in respect of which the taxpayer elects under clause 37(8)(a)(ii)(B) of the Act is 55% of the total of all amounts each of which is that portion of the amount incurred in the year by the taxpayer in respect of salary or wages of an employee of the taxpayer who is directly engaged in scientific research and experimental development carried on in Canada that can reasonably be considered to relate to the scientific research and experimental development having regard to the time spent by the employee on the scientific research and experimental development.

  • (5) Subject to subsections (6) to (8), where in subsection (4) the portion of an expenditure is all or substantially all of the expenditure, that portion shall be replaced by the amount of the expenditure.

  • (6) The amount determined under subsection (4) as the prescribed proxy amount of a taxpayer for a taxation year in respect of a business shall not exceed the amount, if any, by which

    • (a) the total of all amounts deducted in computing the taxpayer’s income for the year from the business,

    exceeds the total of all amounts each of which is

    • (b) an amount deducted in computing the income of the taxpayer for the year from the business under any of sections 20, 24, 26, 30, 32, 37, 66 to 66.8 and 104 of the Act, or

    • (c) an amount incurred by the taxpayer in the year in respect of any outlay or expense made or incurred for the use of, or the right to use, a building other than a special-purpose building.

  • (7) In determining the prescribed proxy amount of a taxpayer for a taxation year, the portion of the amount incurred in the year by the taxpayer in respect of salary or wages of a specified employee of the taxpayer that is included in computing the total described in subsection (4) shall not exceed the lesser of

    • (a) 75% of the amount incurred by the taxpayer in the year in respect of salary or wages of the employee, and

    • (b) the amount determined by the formula

      2.5 × A × B / 365

      where

      A
      is the Year’s Maximum Pensionable Earnings (as determined under section 18 of the Canada Pension Plan) for the calendar year in which the taxation year ends, and
      B
      is the number of days in the taxation year in which the employee is an employee of the taxpayer.
  • (8) Where

    • (a) a taxpayer is a corporation,

    • (b) the taxpayer employs in a taxation year ending in a calendar year an individual who is a specified employee of the taxpayer,

    • (c) the taxpayer is associated with another corporation (referred to as the “associated corporation”) in a taxation year of the associated corporation ending in the calendar year, and

    • (d) the individual is an employee of the associated corporation in the taxation year of the associated corporation ending in the calendar year,

    the total of all amounts that may be included in computing the total described in subsection (4) in respect of salaries or wages of the individual by the taxpayer in its taxation year ending in the calendar year and by all associated corporations in their taxation years ending in the calendar year shall not exceed the amount that is 2.5 times the Year’s Maximum Pensionable Earnings (as determined under section 18 of the Canada Pension Plan) for the calendar year.

  • (9) For the purposes of subsections (4) and (7), an amount incurred in respect of salary or wages of an employee in a taxation year does not include

    • (a) an amount described in section 6 or 7 of the Act;

    • (b) an amount deemed under subsection 78(4) of the Act to have been incurred;

    • (c) bonuses; or

    • (d) remuneration based on profits.

  • (10) For the purpose of subsection (8),

    • (a) an individual related to a particular corporation, and

    • (b) a partnership any member of which is an individual related to a particular corporation or is a corporation associated with a particular corporation,

    shall be deemed to be a corporation associated with the particular corporation.

  • (11) The depreciable property of a taxpayer that is prescribed for the purposes of the definition first term shared-use-equipment in subsection 127(9) of the Act is

    • (a) a building of the taxpayer;

    • (b) a leasehold interest of the taxpayer in a building;

    • (c) a property of the taxpayer if, at the time it was acquired by the taxpayer, the taxpayer or a person related to the taxpayer intended that it would be used in the prosecution of scientific research and experimental development during the assembly, construction or commissioning of a facility, plant or line for commercial manufacturing, commercial processing or other commercial purposes (other than scientific research and experimental development) and intended

      • (i) that it would be used during its operating time in its expected useful life primarily for purposes other than scientific research and experimental development, or

      • (ii) that its value would be consumed primarily in activities other than scientific research and experimental development; and

    • (d) part of a property of the taxpayer if, at the time the part was acquired by the taxpayer, the taxpayer or a person related to the taxpayer intended that the part would be used in the prosecution of scientific research and experimental development during the assembly, construction or commissioning of a facility, plant or line for commercial manufacturing, commercial processing or other commercial purposes (other than scientific research and experimental development), and intended

      • (i) that it would be used during its operating time in its expected useful life primarily for purposes other than scientific research and experimental development, or

      • (ii) that its value would be consumed primarily in activities other than scientific research and experimental development.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/78-749, s. 1
  • SOR/86-1136, ss. 3, 4
  • SOR/94-686, s. 53(F)
  • SOR/95-63, s. 1
  • SOR/2000-296, s. 1
  • 2012, c. 31, s. 62
 
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