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Income Tax Regulations

Version of section 2405 from 2009-07-30 to 2013-06-25:

  •  (1) In this Part,

    • (a) total depreciation has the meaning assigned by paragraph 13(21)(e) of the Act;

    • (b) accumulated 1968 deficit, amount payable, gross investment revenue, life insurance policy, life insurance policy in Canada, maximum tax actuarial reserve, non-segregated property, participating life insurance policy, policy loan and surplus funds derived from operations have the meanings assigned by subsection 138(12) of the Act; and

    • (c) segregated fund and segregated fund policies have the meanings assigned by subsection 138.1(1) of the Act.

  • (2) For the purposes of subsection 138(14) of the Act, the expressions Canadian investment fund for a taxation year, specified Canadian assets and value for the taxation year have the meanings prescribed therefor by subsection 2404(1) as it read in its application to the 1977 taxation year.

  • (3) In this Part and for the purposes of paragraph 219(7)(a) of the Act,

    attributed surplus for the year

    attributed surplus for the year, for a taxation year in respect of a non-resident insurer, means the aggregate of

    • (a) its property and casualty surplus for the year, and

    • (b) an amount equal to the percentage (that is the life surplus factor for the year) of the amount for the year determined under clause (a)(i)(B) of the definition life surplus factor in this subsection; (surplus attribué pour l’année)

    Canadian business property

    Canadian business property of an insurer for a taxation year in respect of an insurance business means

    • (a) if the insurer was resident in Canada throughout the year and either did not carry on a life insurance business in the year or did not carry on an insurance business outside Canada in the year, the property used or held by it in the year in the course of carrying on the business in Canada, and

    • (b) in any other case, the property designated under subsection 2400(1) for the year in respect of the business; (bien d’entreprise canadien)

    Canadian equity property

    Canadian equity property means

    • (a) a share of the capital stock of, or an income bond, income debenture, small business development bond or small business bond issued by, a person (other than a designated corporation) or partnership, as the case may be, resident in Canada, or

    • (b) that proportion of shares of the capital stock of a designated corporation or an interest in a partnership or trust that

      • (i) the aggregate value for the year of Canadian equity property owned by the designated corporation or the partnership or trust, as the case may be,

      is of

      • (ii) the aggregate value for the year of all property owned by the designated corporation, or partnership or trust, as the case may be; (avoir canadien)

    Canadian investment fund

    Canadian investment fund, as at the end of a taxation year, in respect of

    • (a) a life insurer resident in Canada, means the positive amount determined by the formula

      [(A / B) x (C - D)] - E

      where

      A
      is the amount of the insurer’s Canadian reserve liabilities as at the end of the year,
      B
      is the amount of the insurer’s total reserve liabilities as at the end of the year,
      C
      is the total of
      • (i) the aggregate amount of policy loans and foreign policy loans of the insurer as at the end of the year, and

      • (ii) the valuation of all property of the insurer as at the end of the year each of which is

        • (A) an investment property,

        • (B) money, or

        • (C) a balance (other than a property included under clause (A) or (B)) standing to the insurer’s credit as or on account of amounts deposited with a corporation authorized to accept deposits or to carry on the business of offering to the public its services as a trustee,

      D
      is the total of
      • (i) the aggregate of all amounts each of which is an amount outstanding as at the end of the year in respect of a debt (other than a debt referred to in paragraph (h) of the definition valuation in this subsection or an amount referred to in subparagraph (ii)) owing by the insurer in respect of money borrowed by the insurer (other than money used by the insurer for the purpose of earning income from a source that is not an insurance business), and

      • (ii) the aggregate of all amounts each of which is the amount of a cheque outstanding at the end of the year drawn on an account of the insurer maintained with a corporation authorized to accept deposits or to carry on the business of offering to the public its services as a trustee, and

      E
      is the aggregate amount of the policy loans of the insurer as at the end of the year, and
    • (b) a non-resident insurer, means the amount, if any, by which the aggregate of amounts each of which is

      • (i) a maximum tax actuarial reserve of the insurer for the year,

      • (i.1) the maximum amount that the insurer is entitled to claim under subparagraph 138(3)(a)(ii) of the Act for the year,

      • (ii) the maximum amount that the insurer is entitled to deduct under paragraph 20(7)(c) of the Act in computing its income for the year determined on the assumption that it carried on no other than life insurance business other than an accident and sickness insurance business,

      • (iii) the amount of policy dividends, to the extent that such dividends were not included under subparagraph (i) or (ii), that will, according to the annual report of the insurer filed with the relevant authority for the year or, where the insurer was throughout the year subject to the supervision of the relevant authority but was not required to file an annual report with the relevant authority for the year, according to its financial statements for the year, as at the end of the year, become payable by the insurer in the immediately following year under its participating life insurance policies,

      • (iv) a liability (other than a debt referred to in paragraph (h) of the definition valuation in this subsection) or a reserve (other than the insurer’s investment valuation reserve) as reported by the insurer in its annual report for the year to the relevant authority or, where the insurer was throughout the year subject to the supervision of the relevant authority but was not required to file an annual report with the relevant authority for the year, in its financial statements for the year, that was incurred or provided for in the course of carrying on the insurer’s property and casualty insurance business in Canada except to the extent that those amounts are already included under subparagraph (ii),

      • (v) a debt (other than a debt referred to in paragraph (h) of the definition valuation in this subsection) owing by the insurer at that time that was incurred in the course of carrying on an insurance business (other than a property and casualty insurance business) in Canada, except to the extent that those amounts are already included under subparagraph (i), (i.1) or (iii), or

      • (vi) the amount that is the greater of

        • (A) the amount, if any, by which the aggregate of

          • (I) the insurer’s surplus funds derived from operations computed as at the end of the immediately preceding taxation year, and

          • (II) the aggregate of amounts in respect of which the insurer has made an election under subsection 219(4) or (5.2) of the Act, each of which is an amount included in the aggregate determined in respect of the insurer under subparagraph 219(4)(a)(i.1) of the Act at the end of the immediately preceding taxation year

          exceeds

          • (III) the aggregate of amounts determined in respect of the insurer under subparagraphs 219(4)(a) (ii), (iii), (iv) and (v) of the Act, as at the end of the taxation year, and

        • (B) the insurer’s attributed surplus for the year,

        exceeds the aggregate of

      • (vii) the aggregate valuation of all non-segregated property referred to in paragraph 2400(1)(e) at the end of the year in respect of all the insurer’s insurance businesses carried on in Canada other than property that is

        • (A) money, or

        • (B) a balance standing to the insurer’s credit as or on account of amounts deposited with a corporation authorized to accept deposits or to carry on the business of offering to the public its services as a trustee, and

      • (viii) the aggregate amount of the insurer’s deferred acquisition expenses in respect of its property and casualty insurance business in Canada reported by the insurer in its annual report for the year to the relevant authority or, where the insurer was throughout the year subject to the supervision of the relevant authority but was not required to file an annual report with the relevant authority for the year, in its financial statements for the year; (fonds de placement canadien)

    Canadian investment fund for the year

    Canadian investment fund for the year, for a taxation year in respect of a life insurer resident in Canada and a non-resident insurer, means the amount determined under section 2412; (fonds de placement canadien pour l’année)

    Canadian investment property

    Canadian investment property of an insurer for a taxation year means an investment property (unless the insurer is a non-resident insurer and it is established by the insurer that the investment property is not effectively connected with its Canadian insurance businesses) that is

    • (a) land or depreciable property situated in Canada and, for that purpose, depreciable property of an insurer leased by a person resident in Canada for use inside and outside of Canada shall be deemed to be depreciable property situated in Canada,

    • (b) a Canadian equity property,

    • (c) a Canadian resource property,

    • (d) a mortgage, an agreement of sale or any other form of indebtedness in respect of property referred to in paragraph (a),

    • (e) an amount in Canadian currency standing to the insurer’s credit as or on account of amounts deposited with a corporation resident in Canada authorized to accept deposits or to carry on the business of offering to the public its services as a trustee,

    • (f) a bond, debenture or other form of indebtedness (other than a property described in paragraph (d) or (e) in Canadian currency issued by

      • (i) a person resident in Canada, a Canadian partnership or a partnership an interest in which is an investment property described in paragraph (g),

      • (ii) the Government of Canada,

      • (iii) the government of a province of Canada, or

      • (iv) any other political subdivision of Canada or of any province of Canada, or

    • (g) a property (to the extent it is not a property described in paragraph (b) that is

      • (i) a share of a designated corporation resident in Canada,

      • (ii) an interest in a partnership, or

      • (iii) an interest in a trust resident in Canada,

      where not less than 75 per cent of the aggregate value for the year of all property of the corporation, partnership or trust, as the case may be, is in respect of property each of which is property described in paragraphs (a) to (f); (bien de placement canadien)

    Canadian reserve liabilities

    Canadian reserve liabilities of an insurer, as at the end of a taxation year, means the aggregate amount of the insurer’s liabilities and reserves (other than liabilities and reserves in respect of amounts payable out of segregated funds) in respect of its insurance policies in Canada, as determined for the purposes of the relevant authority at the end of the year or as would be determined at that time if the relevant authority required such a determination; (passif de réserve canadienne)

    designated corporation

    designated corporation, in respect of an insurer, at any time in a taxation year, means a corporation in respect of which the insurer or the insurer and persons or partnerships that do not deal at arm’s length with the insurer held, at any time in the year, shares that represented 30 per cent or more of the common shares of the corporation outstanding at that time; (société désignée)

    equity limit for the year

    equity limit for the year, for a taxation year, means

    • (a) in respect of a life insurer resident in Canada, the greater of

      • (i) that proportion of the aggregate value for the year of all the insurer’s equity property that

        • (A) the amount, if any, by which the insurer’s mean Canadian reserve liabilities exceed the aggregate of the insurer’s mean policy loans for the year and 1/2 of the aggregate of outstanding premiums of the insurer in respect of its insurance businesses in Canada as determined for the purposes of the relevant authority at the end of the year and the immediately preceding taxation year,

        is of

        • (B) the amount, if any, by which the insurer’s mean total reserve liabilities exceed the aggregate of the insurer’s mean policy loans and foreign policy loans for the year and 1/2 of the aggregate of outstanding premiums of the insurer in respect of its insurance businesses as determined for the purposes of the relevant authority at the end of the year and the immediately preceding taxation year, and

      • (ii) 8 per cent of the insurer’s Canadian investment fund for the year,

    • (b) in respect of a non-resident insurer (other than a life insurer), 1/4 of the aggregate of

      • (i) the amount, if any, by which the insurer’s mean Canadian reserve liabilities exceed 1/2 of the aggregate of the amounts of the insurer’s deferred acquisition expenses and premiums receivable at the end of the year and the immediately preceding year to the extent that those amounts were included in the insurer’s Canadian reserve liabilities for those years in respect of the insurer’s business in Canada as determined for the purposes of the relevant authority, and

      • (ii) the insurer’s property and casualty surplus for the year, and

    • (c) in respect of a non-resident life insurer, the aggregate of

      • (i) the insurer’s life equity limit for the year, and

      • (ii) 1/4 of the aggregate of

        • (A) the amount, if any, by which the insurer’s mean Canadian reserve liabilities for the year exceed 1/2 of the aggregate of the amounts of the insurer’s deferred acquisition expenses and premiums receivable at the end of the year and the immediately preceding year in respect of the insurer’s business in Canada as determined for the purposes of the relevant authority to the extent that those amounts were included in the insurer’s Canadian reserve liabilities for those years (determined on the assumption that the only insurance business carried on in Canada by the insurer was a property and casualty insurance business), and

        • (B) the insurer’s property and casualty surplus for the year; (plafond des avoirs pour l’année)

    equity property

    equity property means

    • (a) a share of the capital stock of, or an income bond, income debenture, small business development bond or small business bond issued by, a person (other than a designated corporation) or partnership, as the case may be, or

    • (b) that proportion of shares of the capital stock of a designated corporation or an interest in a partnership or trust that

      • (i) the aggregate value for the year of equity property owned by the designated corporation or the partnership or trust, as the case may be,

      is of

      • (ii) the aggregate value for the year of all property owned by the designated corporation or the partnership or trust, as the case may be; (avoir)

    foreign policy loan

    foreign policy loan means an amount advanced at a particular time by an insurer to a policyholder in accordance with the terms and conditions of a life insurance policy, other than a life insurance policy in Canada; (avance sur police étrangère)

    gross Canadian life investment income

    gross Canadian life investment income of a life insurer for a taxation year means the amount, if any, by which the aggregate of

    • (a) the insurer’s gross investment revenue for the year, to the extent that the revenue is from Canadian business property of the insurer for the year in respect of the insurer’s life insurance business,

    • (b) the amount included in computing the insurer’s income for the year under paragraph 138(9)(b) of the Act,

    • (c) [Repealed, SOR/2009-222, s. 3]

    • (d) the portion of the amount deducted under paragraph 20(1)(l) of the Act in computing the insurer’s income for the preceding taxation year that was in respect of Canadian business property of the insurer for that year in respect of the insurer’s life insurance business,

    • (d.1) the total of all amounts each of which is an amount included under section 142.4 of the Act in the insurer’s income for the year in respect of a property disposed of by the insurer that was, in the taxation year of disposition, a Canadian business property of the insurer for that year in respect of the insurer’s life insurance business,

    • (e) the total of all amounts each of which is the insurer’s gain for the year from the disposition of a Canadian business property of the insurer for the year in respect of the insurer’s life insurance business, other than a capital property or a property in respect of which section 142.4 of the Act applies, and

    • (f) the total of all amounts each of which is the insurer’s taxable capital gain for the year from the disposition of a Canadian business property of the insurer for the year in respect of the insurer’s life insurance business,

    • (g) and (h) [Repealed, SOR/2009-222, s. 3]

    exceeds the aggregate of

    • (i) the portion of the amount deducted under paragraph 20(1)(l) of the Act in computing the insurer’s income for the year that is in respect of debt obligations that are Canadian business property of the insurer for the year in respect of the insurer’s life insurance business,

    • (i.1) the total of all amounts each of which is an amount deductible under section 142.4 of the Act in computing the insurer’s income for the year in respect of a property disposed of by the insurer that was, in the taxation year of disposition, a Canadian business property of the insurer for that year in respect of the insurer’s life insurance business,

    • (j) the total of all amounts each of which is the insurer’s loss for the year from the disposition of a Canadian business property of the insurer for the year in respect of the insurer’s life insurance business, other than a capital property or a property in respect of which section 142.4 of the Act applies, and

    • (k) the total of all amounts each of which is the insurer’s allowable capital loss for the year from the disposition of a Canadian business property of the insurer for the year in respect of the insurer’s life insurance business; (revenus bruts de placements en assurance-vie au Canada)

    insurance policy in Canada

    insurance policy in Canada, in respect of an insurer, means, in the case of

    • (a) a life insurance policy, a life insurance policy in Canada,

    • (b) a fire insurance policy, a policy issued or effected upon property situated in Canada, and

    • (c) any other class of insurance policy, a policy where the risks covered by the policy were ordinarily within Canada at the time the policy was issued or effected; (police d’assurance au Canada)

    investment property

    investment property of an insurer for a taxation year means non-segregated property that is

    • (a) property acquired by the insurer for the purpose of earning gross investment revenue, other than property that is

      • (i) property, a portion of which is investment property pursuant to paragraph (b) or (c),

      • (ii) a share of a designated corporation,

      • (iii) a debt owing to the insurer by a designated corporation,

      • (iv) an interest in a partnership, or

      • (v) an interest in a trust,

    • (b) the portion, if any, of property of the insurer (other than property a portion of which is investment property pursuant to paragraph (c) that is

      • (i) land,

      • (ii) depreciable property, or

      • (iii) property that would have been depreciable property if it had been situated in Canada and used in the year in, or held in the year in the course of, carrying on an insurance business in Canada,

      that

      • (iv) the use made of the property in the year for the purpose of earning gross investment revenue therefrom

      is of

      • (v) the whole use made of the property in the year,

    • (c) the portion, if any, of property of the insurer that is not used in the year for the purpose of earning gross investment revenue that is

      • (i) land,

      • (ii) depreciable property, or

      • (iii) property that would be depreciable property if it had been situated in Canada and used in the year in, or held in the year in the course of, carrying on an insurance business in Canada,

      to the extent that the property is held for resale or development or is expected to be used in a subsequent taxation year for the purpose of earning gross investment revenue, or

    • (d) property of the insurer that is

      • (i) a share of, or a debt owing to the insurer by a designated corporation other than a corporation that carries on a business of insurance, banking or offering its services to the public as a trustee or whose principal business is the making of loans,

      • (ii) an interest in partnership, or

      • (iii) an interest in a trust,

      if

      • (iv) the aggregate value for the year of all investment property of the corporation, partnership or trust, as the case may be, is not less than 75 per cent of the aggregate value for the year of all its property, and

      • (v) the gross investment revenue for the year from the investment property referred to in subparagraph (iv) (other than gross investment revenue from persons with whom the corporation, partnership or trust, as the case may be, did not deal at arm’s length) is not less than 90 per cent of the gross revenue for the year of the corporation, partnership or trust, as the case may be,

      assuming for the purposes of subparagraphs (iv) and (v) that the definition gross investment revenue in paragraph 138(12)(e) of the Act and this definition apply to a corporation, partnership or trust, referred to in those subparagraphs, as though the corporation, partnership or trust, as the case may be, were an insurer; (bien de placement)

    life equity limit

    life equity limit of a non-resident life insurer for a taxation year means

    • (a) where the insurer makes an election in respect of its life surplus factor for the year in the manner described in subsection 2401(1), the amount that would have been the insurer’s equity limit for the year if the insurer had been a life insurer resident in Canada registered under the Canadian and British Insurance Companies Act to carry on an insurance business in Canada and it had carried on no other than life insurance business other than an accident and sickness insurance business,

    • (b) where the insurer does not make an election referred to in paragraph (a) in respect of the year, but

      • (i) has made such an election in respect of one of the four immediately preceding taxation years, and

      • (ii) the insurer’s life surplus factor for the year is not determined pursuant to paragraph (c) of the definition life surplus factor in this subsection,

      the amount that would have been the insurer’s equity limit for the year if the insurer had been a life insurer resident in Canada registered under the Canadian and British Insurance Companies Act to carry on an insurance business in Canada and it had carried on no other than life insurance business other than an accident and sickness insurance business, using the amount, in respect of the most recent taxation year for which such an election was made, determined under subparagraph (a)(i) of the definition, in this subsection, equity limit for the year, and

    • (c) in any other case, 8 per cent of the amount of the insurer’s Canadian investment fund for the year; (plafond des avoirs d’assurance-vie)

    life surplus factor

    life surplus factor of a non-resident life insurer for a taxation year means

    • (a) subject to subsection 2401(2), where the insurer elects in respect of the year in the manner described in subsection 2401(1), the proportion (expressed as a percentage) that

      • (i) the amount, if any, by which

        • (A) the amount that would have been the insurer’s Canadian investment fund for the year if the insurer had been a life insurer resident in Canada registered under the Canadian and British Insurance Companies Act to carry on an insurance business in Canada and it had carried on no other than life insurance business other than an accident and sickness insurance business

        exceeds

        • (B) the amount, if any, by which 1/2 of the aggregate of

          • (I) the aggregate of the amounts described in subparagraphs (b)(i), (i.1), (ii), (iii) and (v) of the definition Canadian investment fund in this subsection in respect of a non-resident insurer, as at the end of the year, and

          • (II) the aggregate of those amounts as at the end of the immediately preceding taxation year,

          exceeds the aggregate value for the year of all the insurer’s non-segregated property referred to in paragraph 2400(1)(e) in respect of all the insurer’s insurance businesses (other than its property and casualty insurance business) carried on in Canada, other than property that is

          • (III) money, or

          • (IV) a balance standing to the insurer’s credit as or on account of amounts deposited with a corporation authorized to accept deposits or to carry on the business of offering to the public its services as a trustee

      is of

      • (ii) the amount determined under clause (i)(B),

    • (b) where the insurer does not make an election referred to in paragraph (a) in respect of the year, but

      • (i) has made such an election in respect of one of the four immediately preceding taxation years, and

      • (ii) has not, since making the most recent election referred to in subparagraph (i), selected pursuant to this paragraph the percentage referred to in paragraph (c) as its life surplus factor for a year prior to the taxation year,

      the percentage, as shall be selected by the insurer, that is the percentage

      • (iii) determined under paragraph (a) in respect of the most recent taxation year for which the insurer made an election, or

      • (iv) referred to in paragraph (c), and

    • (c) in any other case, 10 per cent; (facteur d’excédent d’assurance-vie)

    mean amount on deposit

    mean amount on deposit with an insurer for a taxation year in respect of life insurance policies means 1/2 of the aggregate of

    • (a) all amounts on deposit with the insurer as at the end of the year in respect of those policies, and

    • (b) all amounts on deposit with the insurer as at the end of the immediately preceding taxation year in respect of those policies; (montant moyen en dépôt)

    mean Canadian reserve liabilities

    mean Canadian reserve liabilities of an insurer for a taxation year means 1/2 of the aggregate of

    • (a) the insurer’s Canadian reserve liabilities as at the end of the year, and

    • (b) the insurer’s Canadian reserve liabilities as at the end of the immediately preceding taxation year; (moyenne du passif de réserve canadienne)

    mean maximum tax actuarial reserve

    mean maximum tax actuarial reserve, in respect of a particular class of life insurance policies of an insurer for a taxation year, means 1/2 of the aggregate of

    • (a) the insurer’s maximum tax actuarial reserve for that class of policies for the year, and

    • (b) the insurer’s maximum tax actuarial reserve for that class of policies for the immediately preceding taxation year; (réserve actuarielle maximale moyenne aux fins de l’impôt)

    mean policy loans

    mean policy loans, of an insurer for a taxation year, means 1/2 of the aggregate of

    • (a) the insurer’s policy loans as at the end of the year, and

    • (b) the insurer’s policy loans as at the end of the immediately preceding taxation year; (moyenne des avances sur police)

    mean policy loans and foreign policy loans

    mean policy loans and foreign policy loans, of an insurer for a taxation year, means 1/2 of the aggregate of

    • (a) the insurer’s policy loans and foreign policy loans as at the end of the year, and

    • (b) the insurer’s policy loans and foreign policy loans as at the end of the immediately preceding taxation year; (moyenne des avances sur police et avances sur police étrangère)

    mean total reserve liabilities

    mean total reserve liabilities of an insurer for a taxation year means 1/2 of the aggregate of

    • (a) the insurer’s total reserve liabilities as at the end of the year, and

    • (b) the insurer’s total reserve liabilities as at the end of the immediately preceding taxation year; (moyenne du passif total de réserve)

    property and casualty surplus

    property and casualty surplus of an insurer for a taxation year means the aggregate of

    • (a) 15 per cent of 1/2 of the aggregate of

      • (i) the insurer’s unearned premium reserve as at the end of the year, and

      • (ii) the insurer’s unearned premium reserve as at the end of the immediately preceding taxation year,

      as reported to the relevant authority in respect of its property and casualty insurance business,

    • (b) 15 per cent of 1/2 of the aggregate of

      • (i) the insurer’s provision for unpaid claims and adjustment expenses as at the end of the year, and

      • (ii) the insurer’s provision for unpaid claims and adjustment expenses as at the end of the immediately preceding taxation year,

      as reported to the relevant authority in respect of its property and casualty insurance business, and

    • (c) 1/2 of the aggregate of

      • (i) the insurer’s investment valuation reserve as at the end of the year, and

      • (ii) the insurer’s investment valuation reserve as at the end of the immediately preceding taxation year,

      as reported to the relevant authority in respect of its property and casualty insurance business; (excédent provenant d’assurance de biens et de risques divers)

    property of the insurer in the course of development

    property of the insurer in the course of development[Repealed, SOR/90-661, s. 8]

    relevant authority

    relevant authority means

    • (a) the Superintendent of Financial Institutions, if the insurer is required by law to report to the Superintendent of Financial Institutions, or

    • (b) in any other case, the Superintendent of Insurance or other similar officer or authority of the province under whose laws the insurer is incorporated; (autorité compétente)

    total reserve liabilities

    total reserve liabilities of an insurer, as at the end of a taxation year, means the aggregate amount of the insurer’s liabilities and reserves (other than liabilities and reserves in respect of amounts payable out of segregated funds) in respect of all its insurance policies, as determined for the purposes of the relevant authority at the end of the year; (passif total de réserve)

    valuation

    valuation, in respect of a property of an insurer, designated corporation, partnership or trust (in this definition referred to as an owner) at a particular time, means, in the case of

    • (a) land, the cost thereof to the owner,

    • (b) depreciable property of a prescribed class (other than a property referred to in paragraph (f), the proportion of the owner’s undepreciated capital cost at that time of property of the class that

      • (i) the owner’s capital cost of the property

      is of

      • (ii) the owner’s capital cost of all property of the class,

    • (c) property that would have been depreciable property of a prescribed class if it had been situated in Canada and used in the year in, or held in the year in the course of, carrying on an insurance business in Canada, the amount, if any, by which

      • (i) the owner’s capital cost of the property

      exceeds

      • (ii) the amount that would have been the total depreciation allowed to the owner before the particular time in respect of the property if it had been the owner’s only depreciable property of the class and the owner had claimed the maximum amount allowable under paragraph 20(1)(a) of the Act in respect of property of that class for each year in which the owner owned the property,

    • (d) a share of a corporation (other than a designated corporation), the cost thereof to the owner,

    • (e) a bond, debenture, mortgage, hypothec or agreement of sale (other than a property referred to in paragraph (f)), the book value thereof in the accounts of the owner as determined for the purposes of the relevant authority or that would have been so determined if the owner had been a life insurer resident in Canada and registered under the Canadian and British Insurance Companies Act to carry on an insurance business in Canada,

    • (e.1) a balance standing to the owner’s credit as or on account of amounts deposited with a corporation authorized to accept deposits or to carry on the business of offering to the public its services as a trustee, the amount thereof,

    • (f) a property acquired and disposed of in a taxation year, the cost thereof to the owner, and

    • (g) a property (other than a property referred to in any of paragraphs (a) to (f)), the maximum value of the property as determined for the purposes of the relevant authority or that would have been so determined if the owner had been a life insurer resident in Canada and registered under the Canadian and British Insurance Companies Act to carry on an insurance business in Canada,

    minus

    • (h) in respect of a particular property referred to in any of paragraphs (a) to (g), the amount of any debt that was incurred or assumed by the owner to acquire that particular property and that was owing by the owner at that time; (valeur)

    value for the year

    value for the year, in respect of a property of an insurer, designated corporation, partnership or trust (in this definition referred to as an owner) for a taxation year, means, in the case of

    • (a) a property that is a mortgage, a hypothec, an agreement of sale or an investment property that is a balance standing to the insurer’s credit as or on account of amounts deposited with a corporation authorized to accept deposits or to carry on the business of offering to the public its services as a trustee, the amount, if any, by which

      • (i) the amount obtained when the gross investment revenue for the year from the property is divided by the average rate of interest earned by the owner (expressed as an annual rate) on the amortized cost of the property during the year if that rate of interest were expressed as a fraction

      exceeds

      • (ii) the amount obtained when the interest paid or payable for the year on a debt incurred for the purposes of acquiring the property is divided by the average rate of interest paid or payable by the owner (expressed as an annual rate) on the debt for the year if that rate of interest were expressed as a fraction,

    • (b) a property (other than a property referred to in paragraph (a)) that was not owned by the owner throughout the year, the proportion of

      • (i) the valuation of the property as at the end of the immediately preceding taxation year, where the property was owned by the owner at that time, and

      • (ii) the valuation of the property, where it was acquired by the owner during the year,

      that

      • (iii) the number of days that the property may reasonably be considered to have been owned by the owner during the taxation year

      is of

      • (iv) the number of days in the taxation year, and

    • (c) a property (other than a property referred to in paragraph (a) or (b)), 1/2 of the aggregate of

      • (i) the valuation of the property as at the end of the year, and

      • (ii) the valuation of the property as at the end of the immediately preceding taxation year. (valeur pour l’année)

  • (4) For the purposes of the definition in subsection (3), Canadian investment fund in respect of a life insurer resident in Canada, notwithstanding the definitions Canadian reserve liabilities and total reserve liabilities in that subsection, the insurer shall determine its liabilities and reserves in respect of its insurance policies outside Canada in a manner consistent with that used in determining its liabilities and reserves in respect of its insurance policies in Canada.

  • (5) For the purposes of subsection (3), the cost of a property shall be determined without regard to subsection 142.5(2) of the Act.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/78-89, s. 1
  • SOR/79-670, s. 4
  • SOR/80-419, s. 4
  • SOR/80-618, s. 6
  • SOR/81-632, s. 2
  • SOR/90-661, s. 8
  • SOR/92-681, s. 3
  • SOR/94-686, ss. 55, 62, 69(F), 78(F), 79(F)
  • SOR/2009-222, s. 3
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