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

Regulations are current to 2017-10-13 and last amended on 2017-07-01. Previous Versions

Designated Insurance Property

  •  (1) For the purposes of the definition designated insurance property in subsection 138(12) of the Act, designated insurance property of an insurer for a taxation year means property that is designated in accordance with subsections (2) to (7) for the year

    • (a) by the insurer in its return of income under Part I of the Act for the year; or

    • (b) if the Minister determines that the insurer has not made a designation that is in accordance with the prescribed rules found in this section, by the Minister.

Designation Rules

  • (2) For the purposes of subsection (1), an insurer, or the Minister if paragraph (1)(b) applies,

    • (a) shall designate for a taxation year investment property of the insurer for the year with a total value for the year equal to the amount, if any, by which the insurer’s mean Canadian reserve liabilities for the year in respect of its life insurance business in Canada exceeds the total of the insurer’s mean Canadian outstanding premiums and mean policy loans for the year in respect of that business (to the extent that the amount of the mean policy loans was not otherwise deducted in computing the insurer’s mean Canadian reserve liabilities for the year);

    • (b) shall designate for a taxation year investment property of the insurer for the year with a total value for the year equal to the amount, if any, by which the insurer’s mean Canadian reserve liabilities for the year in respect of its accident and sickness insurance business in Canada exceeds the insurer’s mean Canadian outstanding premiums for the year in respect of that business;

    • (c) shall designate for a taxation year in respect of the insurer’s insurance business in Canada (other than a life insurance business or an accident and sickness insurance business) investment property of the insurer for the year with a total value for the year equal to the amount, if any, by which the insurer’s mean Canadian reserve liabilities for the year in respect of that business exceeds 50% of the total of all amounts each of which is the amount, as at the end of the year or as at the end of its preceding taxation year, of a premium receivable or a deferred acquisition expense (to the extent that it is included in the insurer’s Canadian reserve liabilities as at the end of the year or preceding taxation year, as the case may be) of the insurer in respect of that business;

    • (d) if

      • (i) the insurer’s mean Canadian investment fund for a taxation year

      exceeds

      • (ii) the total value for the year of all property required to be designated under paragraph (a), (b) or (c) for the year,

      shall designate for the year, in respect of a particular insurance business that the insurer carries on in Canada, investment property of the insurer for the year with a total value for the year equal to that excess;

    • (e) for greater certainty, under each of paragraphs (a), (b), (c) and (d), shall designate for the taxation year investment property with a total value for the year equal to the amount, if any, determined under each of those paragraphs, and no investment property, or portion of investment property, designated for the year under any of paragraphs (a) to (d) may be designated for the year under any other paragraph; and

    • (f) may designate for a taxation year a portion of a particular investment property if the designation of the entire property would result in a designation of property with a total value for the year exceeding that required to be designated under paragraphs (a) to (d) for the year.

Order of Designation of Properties

  • (3) For the purpose of subsection (2), investment property of an insurer for a taxation year shall be designated for the year in respect of the insurer’s insurance businesses carried on by it in Canada in the following order:

    • (a) Canadian investment property of the insurer for the year owned by the insurer at the beginning of the year that was designated insurance property of the insurer for its preceding taxation year, except that such property shall be designated in the following order:

      • (i) real and depreciable property,

      • (ii) mortgages, hypothecs, agreements of sale and other forms of indebtedness in respect of real property situated in Canada or depreciable property situated in Canada or depreciable property leased to a person resident in Canada for use inside and outside of Canada, and

      • (iii) other property;

    • (b) investment property (other than Canadian investment property of the insurer for the year) owned by the insurer at the beginning of the year that was designated insurance property of the insurer for its preceding taxation year;

    • (c) Canadian investment property of the insurer for the year (other than property included in paragraph (a)) in the order set out in subparagraphs (a)(i) to (iii); and

    • (d) other investment property.

Equity Limit for the Year

  • (4) Notwithstanding subsections (2) and (3),

    • (a) the total value for the year of Canadian equity property of an insurer that may be designated in respect of the insurer’s insurance businesses for a taxation year shall not exceed the insurer’s equity limit for the year; and

    • (b) for a taxation year a portion of a particular Canadian equity property of an insurer may be designated if the designation of the entire property would result in a designation of Canadian equity property of the insurer for the year with a total value for the year exceeding the insurer’s equity limit for the year.

Exchanged Property

  • (5) For the purposes of subsection (3), property acquired by an insurer in a particular taxation year is deemed to be designated insurance property of the insurer in respect of a particular business of the insurer for its preceding taxation year and to have been owned by the insurer at the beginning of the particular taxation year if the property was acquired

    • (a) by reason of

      • (i) a transaction to which any of sections 51, 51.1, 85.1 and 86 of the Act applies,

      • (ii) a transaction in respect of which an election is made under subsection 85(1) or (2) of the Act,

      • (iii) an amalgamation (within the meaning assigned by subsection 87(1) of the Act), or (iv) a winding-up of a corporation to which subsection 88(1) of the Act applies, and

    • (b) as consideration for or in exchange for property of the insurer that was designated insurance property of the insurer in respect of the particular insurance business for its preceding taxation year.

Non-investment Property

  • (6) Non-segregated property owned by an insurer at any time in a taxation year (other than investment property of the insurer for the year) that is used or held by the insurer in the year in the course of carrying on an insurance business in Canada is deemed to be designated insurance property of the insurer for the year in respect of the business.

Policy Loan Excluded from Designated Property

  • (7) Notwithstanding any other provision in this Part, a policy loan payable to an insurer is not designated insurance property of the insurer.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/79-670, s. 4;
  • SOR/2000-413, s. 2;
  • 2010, c. 25, 82.

 [Repealed, 2013, c. 34, s. 391]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/79-670, s. 4;
  • SOR/83-865, s. 7;
  • SOR/90-661, s. 7;
  • SOR/2009-222, s. 2;
  • 2013, c. 34, s. 391.

Branch Tax Elections

  •  (1) An election referred to in subsection 219(4) of the Act shall be made by a non-resident insurer in respect of a taxation year by filing, with its return of income required by subsection 150(1) of the Act to be filed for the year, a letter in duplicate stating

    • (a) the insurer elects under subsection 219(4) of the Act; and

    • (b) the amount the insurer elects to deduct under subsection 219(4) of the Act.

  • (2) Where a joint election referred to in subsection 219(5.2) of the Act is made by a non-resident insurer and a qualified related corporation (within the meaning assigned by subsection 219(8) of the Act) of the non-resident insurer in respect of a taxation year of the non-resident insurer, it shall be made by filing, with the non-resident insurer’s return of income required by subsection 150(1) of the Act to be filed for the year in which the event to which the election relates occurred, a letter in duplicate signed by an authorized officer of the non-resident insurer and an authorized officer of the qualified related corporation stating

    • (a) whether paragraphs 219(5.2)(a) and (b) of the Act apply; and

    • (b) the amount elected under subsection 219(5.2) of the Act.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/79-670, s. 4;
  • SOR/81-632, s. 1;
  • SOR/94-686, s. 79(F);
  • SOR/2000-413, s. 3.
 
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