Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Act current to 2014-06-12 and last amended on 2014-01-01. Previous Versions

Marginal note:Where no designated beneficiaries
  •  (1) No tax is payable under this Part by a trust for a taxation year in respect of which the trustee has certified in the trust’s return under this Part for the year that no beneficiary under the trust was a designated beneficiary in the year.

  • Marginal note:Where beneficiary deemed not designated

    (2) Where a trust would, if the trust paid tax under this Part for a taxation year, be entitled to designate an amount under subsection 210.2(3) in respect of a non-resident beneficiary and the income amount in respect of the beneficiary is included in computing the income of the beneficiary which is subject to tax under Part I by reason of subsection 2(3) and is not exempt from tax under Part I by reason of a provision contained in a tax convention or agreement with another country that has the force of law in Canada, for the purposes of subsection 210.3(1), the beneficiary shall be deemed not to be a designated beneficiary of the trust at any time in the year.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 1988, c. 55, s. 160.

PART XII.3TAX ON INVESTMENT INCOME OF LIFE INSURERS

Marginal note:Definitions
  •  (1) For the purposes of this Part,

    “existing guaranteed life insurance policy”

    « police d’assurance-vie garantie existante »

    “existing guaranteed life insurance policy”, at any time, means a non-participating life insurance policy in Canada in respect of which

    • (a) the amount of every premium that became payable before that time and after December 31, 1989,

    • (b) the number of premium payments under the policy, and

    • (c) the amount of each benefit under the policy at that time

    were fixed and determined on or before December 31, 1989;

    “life insurance policy”

    « police d’assurance-vie »

    “life insurance policy” includes a benefit under

    • (a) a group life insurance policy, and

    • (b) a group annuity contract

    but does not include

    • (c) that part of a policy in respect of which the policyholder is deemed by paragraph 138.1(1)(e) to have an interest in a related segregated fund trust, or

    • (d) a reinsurance arrangement;

    “life insurance policy in Canada”

    « police d’assurance-vie au Canada »

    “life insurance policy in Canada” means a life insurance policy issued or effected by an insurer on the life of a person resident in Canada at the time the policy was issued or effected;

    “net interest rate”

    « taux d’intérêt net »

    “net interest rate”, in respect of a liability, benefit, risk or guarantee under a life insurance policy of an insurer for a taxation year, is the positive amount, if any, determined by the formula

    (A - B) × C

    where

    A 
    is the simple arithmetic average determined as of the first day of the year of the average yield (expressed as a percentage per year rounded to 2 decimal points) in each of the 60 immediately preceding months prevailing on all domestic Canadian-dollar Government of Canada bonds outstanding on the last Wednesday of that month that have a remaining term to maturity of more than 10 years,
    B 
    is
    • (a) in the case of a guaranteed benefit provided under the terms and conditions of the policy as they existed on March 2, 1988, other than a policy where, at any time after March 2, 1988, its terms and conditions relating to premiums and benefits were changed (otherwise than to give effect to the terms and conditions that were determined before March 3, 1988), the greater of

      • (i) the rate of interest (expressed as a percentage per year) used by the insurer in determining the amount of the guaranteed benefit, and

      • (ii) 4%, and

    • (b) in any other case, nil, and

    C 
    is
    • (a) in the case of a guaranteed benefit to which paragraph (a) of the description of B applies, 65%, and

    • (b) in any other case, 55%;

    “non-participating life insurance policy”

    « police d’assurance-vie sans participation »

    “non-participating life insurance policy” means a life insurance policy that is not a participating life insurance policy;

    “participating life insurance policy”

    « police d’assurance-vie avec participation »

    “participating life insurance policy” has the meaning assigned by subsection 138(12);

    “policy loan”

    « avance sur police »

    “policy loan” has the meaning assigned by subsection 138(12);

    “registered life insurance policy”

    « police d’assurance-vie agréée »

    “registered life insurance policy” means a life insurance policy issued or effected as or under a pooled registered pension plan, a registered retirement savings plan, a deferred profit sharing plan or a registered pension plan;

    “reinsurance arrangement”

    « mécanisme de réassurance »

    “reinsurance arrangement” does not include an arrangement under which an insurer has assumed the obligations of the issuer of a life insurance policy to the policyholder;

    “segregated fund”

    « fonds réservé »

    “segregated fund” has the meaning given that expression in subsection 138.1(1);

    “specified transaction or event”

    « opération ou événement déterminé »

    “specified transaction or event”, in respect of a life insurance policy, means

    • (a) a change in underwriting class,

    • (b) a change in premium because of a change in frequency of premium payments within a year that does not alter the present value, at the beginning of the year, of the total premiums to be paid under the policy in the year,

    • (c) an addition under the terms of the policy as they existed on

      • (i) in the case of an existing guaranteed life insurance policy, December 31, 1989,

      • (ii) in any other case, March 2, 1988,

      of accidental death, dismemberment, disability or guaranteed purchase option benefits,

    • (d) the deletion of a rider,

    • (e) redating lapsed policies within the reinstatement period referred to in paragraph (g) of the definition “disposition” in subsection 148(9) or redating for policy loan indebtedness,

    • (f) a change in premium because of a correction of erroneous information,

    • (g) the payment of a premium after its due date, or no more than 30 days before its due date, as established on or before

      • (i) in the case of an existing guaranteed life insurance policy, December 31, 1989, and

      • (ii) in any other case, March 2, 1988, and

    • (h) the payment of an amount described in paragraph (a) of the definition “premium” in subsection 148(9);

    “taxable life insurance policy”

    « police d’assurance-vie imposable »

    “taxable life insurance policy” of an insurer at any time means a life insurance policy in Canada issued by the insurer (or in respect of which the insurer has assumed the obligations of the issuer of the policy to the policyholder), other than a policy that is at that time

    • (a) an existing guaranteed life insurance policy,

    • (b) an annuity contract (including a settlement annuity),

    • (c) a registered life insurance policy,

    • (d) a registered pension plan, or

    • (e) a retirement compensation arrangement.

  • Marginal note:Riders and changes in terms

    (2) For the purposes of this Part,

    • (a) any rider added at any time after March 2, 1988 to a life insurance policy shall be deemed to be a separate life insurance policy issued and effected at that time; and

    • (b) a change in the terms or conditions of a life insurance policy resulting from a specified transaction or event shall be deemed not to have occurred and not to be a change.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 211;
  • 1994, c. 7, Sch. II, s. 171;
  • 1997, c. 25, s. 60;
  • 2008, c. 28, s. 32;
  • 2009, c. 2, s. 72;
  • 2012, c. 31, s. 47.