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

Act current to 2015-06-09 and last amended on 2015-01-02. Previous Versions

Marginal note:Tax payable
  •  (1) Every life insurer shall pay a tax under this Part for each taxation year equal to 15% of its taxable Canadian life investment income for the year.

  • Marginal note:Taxable Canadian life investment income

    (2) For the purposes of this Part, the taxable Canadian life investment income of a life insurer for a taxation year is the amount, if any, by which its Canadian life investment income for the year exceeds the total of its Canadian life investment losses for the 20 taxation years immediately preceding the year, to the extent that those losses were not deducted in computing its taxable Canadian life investment income for any preceding taxation year.

  • Marginal note:Canadian life investment income

    (3) For the purposes of this Part, the Canadian life investment income or loss of a life insurer for a taxation year is the positive or negative amount determined by the formula

    A + B - C

    where

    A 
    is subject to subsection 211.1(4), the total of all amounts, each of which is in respect of a liability, benefit, risk or guarantee under a life insurance policy that was at any time in the year a taxable life insurance policy of the insurer, determined by multiplying the net interest rate in respect of the liability, benefit, risk or guarantee for the year by 1/2 of the total of
    • (a) the maximum amount that would be determined under paragraph 1401(1)(a), (c) or (d) of the Income Tax Regulations (other than an amount that would be determined under subparagraph 1401(1)(d)(ii) of those Regulations in respect of a disabled life) in respect of the insurer for the year in respect of the liability, benefit, risk or guarantee if subsection 1401(1) of those Regulations applied to all life insurance policies and if that amount were determined without reference to any policy loan or reinsurance arrangement, and

    • (b) the maximum amount that would be determined under paragraph 1401(1)(a), (c) or (d) of the Income Tax Regulations (other than an amount that would be determined under subparagraph 1401(1)(d)(ii) of those Regulations in respect of a disabled life) in respect of the insurer for the preceding taxation year in respect of the liability, benefit, risk or guarantee if subsection 1401(1) of those Regulations applied to all life insurance policies and if that amount were determined without reference to any policy loan or reinsurance arrangement;

    B 
    is the total of all amounts, each of which is the positive or negative amount in respect of a life insurance policy that was at any time in the year a taxable life insurance policy of the insurer, determined by the formula

    D - E

    where

    D 
    is, subject to subsection 211.1(4), the amount determined by multiplying the percentage determined in the description of A in the definition “net interest rate” in subsection 211(1) in respect of the year by 1/2 of the total of
    • (a) the maximum amount that would be determined under paragraph 1401(1)(c.1) of the Income Tax Regulations in respect of the insurer for the year in respect of the policy if subsection 1401(1) of those Regulations applied to all life insurance policies and if that amount were determined without reference to any policy loan or reinsurance arrangement, and

    • (b) the maximum amount that would be determined under paragraph 1401(1)(c.1) of the Income Tax Regulations in respect of the insurer for the preceding taxation year in respect of the policy if subsection 1401(1) of those Regulations applied to all life insurance policies and if that amount were determined without reference to any policy loan or reinsurance arrangement, and

    E 
    is the amount, if any, by which
    • (a) the total of all amounts determined in respect of the insurer under the description of in respect of the policy for the year and any preceding taxation years ending after 1989

    exceeds the total of

    • (b) all amounts determined in respect of the insurer under the description of E in respect of the policy for taxation years ending before the year, and

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

      • (i) the maximum amount that would be determined under paragraph 1401(1)(c.1) of the Income Tax Regulations in respect of the insurer for the year in respect of the policy if subsection 1401(1) of those Regulations applied to all life insurance policies and if that amount were determined without reference to any policy loan or reinsurance arrangement

      exceeds

      • (ii) the maximum amount that would be determined under paragraph 1401(1)(c.1) of the Income Tax Regulations in respect of the insurer for its last 1989 taxation year in respect of the policy if subsection 1401(1) of those Regulations applied to all life insurance policies and if that amount were determined without reference to any policy loan or reinsurance arrangement; and

    C 
    is the total of all amounts each of which is 100% of the amount required to be included in computing the income of a policyholder under section 12.2 or paragraph 56(1)(j) for which the insurer is required by regulation to prepare an information return in respect of the calendar year ending in the taxation year, in respect of a taxable life insurance policy of the insurer, except that the reference in this description to 100% shall be read as a reference to,
    • (a) where paragraph (a) of the description of B in the definition “net interest rate” in subsection 211(1) applies for any taxation year in respect of a guaranteed benefit under the policy,

      • 0% 
        for calendar years before 1991,
      • 5% 
        for 1991,
      • 10% 
        for 1992,
      • 15% 
        for 1993,
      • 20% 
        for 1994,
      • 25% 
        for 1995,
      • 30% 
        for 1996,
      • 35% 
        for 1997,
      • 40% 
        for 1998,
      • 45% 
        for 1999, and
      • 50% 
        for calendar years after 1999, and
    • (b) where the policy was at any time after 1989 an existing guaranteed life insurance policy,

      • 0% 
        for the calendar year in which it became a taxable life insurance policy of the insurer,
      • 0% 
        for the first following calendar year,
      • 0% 
        for the second following calendar year,
      • 5% 
        for the third following calendar year,
      • 10% 
        for the fourth following calendar year,
      • 15% 
        for the fifth following calendar year,
      • 20% 
        for the sixth following calendar year,
      • 25% 
        for the seventh following calendar year,
      • 30% 
        for the eighth following calendar year,
      • 35% 
        for the ninth following calendar year,
      • 40% 
        for the tenth following calendar year,
      • 45% 
        for the eleventh following calendar year, and
      • 50% 
        for the twelfth following and subsequent calendar years.
  • Marginal note:Short taxation year

    (4) Where a taxation year of a life insurer is less than 51 weeks, the values of A and D in subsection 211.1(3) for the year are that proportion of those values otherwise so determined that the number of days in the year (other than February 29) is of 365.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 211.1;
  • 1994, c. 7, Sch. II, s. 172;
  • 1997, c. 25, s. 61;
  • 1998, c. 19, s. 213;
  • 2005, c. 19, s. 46;
  • 2006, c. 4, s. 84.