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

Regulations are current to 2017-11-20 and last amended on 2017-07-01. Previous Versions

 [Repealed, 2013, c. 34, s. 392]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/79-670, s. 4;
  • 2013, c. 34, s. 392.

 [Repealed, 2013, c. 34, s. 392]

  • 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;
  • 2013, c. 34, s. 392.

 [Repealed, 2013, c. 34, s. 392]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/79-670, s. 4. SOR/94-686, s. 55(F);
  • SOR/2000-413, s. 4;
  • 2013, c. 34, s. 392.

 [Repealed, 2013, c. 34, s. 392]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/79-670, s. 4;
  • SOR/88-165, s. 30(F);
  • SOR/94-686, s. 55(F);
  • 2013, c. 34, s. 392.

 [Repealed, 2013, c. 34, s. 392]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/79-670, s. 4;
  • SOR/80-163, s. 1;
  • SOR/88-165, s. 30(F);
  • SOR/94-686, s. 55(F);
  • 2013, c. 34, s. 392.

 [Repealed, 2013, c. 34, s. 392]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/79-670, s. 4;
  • SOR/80-419, s. 5;
  • SOR/90-661, s. 9;
  • 2013, c. 34, s. 392.

Prescribed Amount

 For the purpose of subsection 138(4.4) of the Act, the amount prescribed in respect of an insurer’s cost or capital cost, as the case may be, of a property for a period in a taxation year is the amount determined by the formula

[(A x B) x C / 365] - D

where

A
is the average annual rate of interest determined by reference to rates of interest prescribed in section 4301 for the months or portion thereof in the period;
B
is the amount, if any, by which, the average cost or average capital cost, as the case may be, of the property for the period exceeds the average amount of debt relating to the acquisition of the property outstanding during the period that bears a fair market interest rate and, for that purpose,
  • (a) the average cost or average capital cost, as the case may be, of a property is the total of

    • (i) the aggregate of all amounts each of which is the cost or capital cost, as the case may be, if any, immediately before the beginning of the period in respect of the property, and

    • (ii) the aggregate of all amounts each of which is the proportion of any expenditure incurred on any day in the period in respect of the cost or capital cost, as the case may be, of the property that

      • (A) the number of days from that day to the end of the period

      is of

      • (B) the number of days in the period, and

  • (b) the average amount of debt relating to the acquisition of a property is the amount, if any, by which the total of

    • (i) the aggregate of all amounts each of which is an indebtedness relating to the acquisition that was outstanding at the beginning of the period, and

    • (ii) the aggregate of all amounts each of which is the proportion of an indebtedness relating to the acquisition that was incurred on any day in the period that

      • (A) the number of days from that day to the end of the period

      is of

      • (B) the number of days in the period,

    exceeds

    • (iii) the aggregate of all amounts each of which is the proportion of an amount that was paid in respect of any indebtedness referred to in subparagraph (i) or (ii) on any day in the period (other than a payment of interest in respect thereof) that

      • (A) the number of days from that day to the end of the period

      is of

      • (B) the number of days in the period;

C
is the number of days in the period; and
D
is the income derived from the property in the period by the person or partnership that owned the property.
  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations.  SOR/90-661, s. 10;
  • SOR/94-686, ss. 55(F), 78(F), 79(F);
  • SOR/2000-413, s. 5.
  •  (1) Subject to subsection (2), the amount prescribed in respect of an insurer for a taxation year for the purposes of paragraph 138(9)(b) of the Act shall be the amount determined by the formula

    A - (B + B.1 + C)

    where

    A
    is the positive or negative amount, as the case may be, determined in respect of the insurer for the year under subsection (3);
    B
    is the positive or negative amount, as the case may be, determined in respect of the insurer for the year under subsection (4) in respect of the insurer’s investment property for the year that is designated insurance property of the insurer for the year;
    B.1
    is the positive or negative amount, as the case may be, determined in respect of the insurer for the year under subsection (4.1) in respect of property disposed of by the insurer in a taxation year for which it was designated insurance property of the insurer; and
    C
    is the amount claimed by the insurer for the year in respect of any balance of its cumulative excess account at the end of the year.
  • (2) Where an amount computed under subsection (1) in respect of an insurer is a negative amount, that amount shall be deemed to be nil.

  • (3) The positive or negative amount, as the case may be, determined under this subsection in respect of an insurer for a taxation year shall be

    • (a) if the value for the year of the insurer’s foreign investment property that is designated insurance property for the year is not greater than 5% of the amount of the insurer’s mean Canadian investment fund for the year and the insurer so elects in its return of income under Part I of the Act for the year, the amount determined by the formula

      {[((A + A.1) / B) x (C + J)] + [(D x F) / E]}

    or

    • (b) in any other case, the amount determined by the formula

      {[((A + A.1)/B) x C] + [(D x F)/E] + [((G + G.1)/H) x J]}

      where

      A
      is the positive or negative amount, as the case may be, determined in respect of the insurer for the year under subsection (4) in respect of Canadian investment property (other than Canadian equity property) owned by the insurer at any time in the year;
      A.1
      is the positive or negative amount, as the case may be, determined in respect of the insurer for the year under subsection (4.1) in respect of Canadian investment property (other than Canadian equity property) disposed of by the insurer in the year or a preceding taxation year;
      B
      is the total value for the year of Canadian investment property (other than Canadian equity property and any property described in paragraph (i) of the definition Canadian investment property in subsection 2400(1)) owned by the insurer at any time in the year;
      C
      is the total value for the year of the insurer’s Canadian investment property for the year (other than Canadian equity property and any property described in paragraph (i) of the definition Canadian investment property in subsection 2400(1)) that is designated insurance property of the insurer for the year;
      D
      is the positive or negative amount, as the case may be, determined in respect of the insurer for the year under subsection (4) in respect of Canadian investment property that is Canadian equity property owned by the insurer at any time in the year;
      E
      is the total value for the year of Canadian investment property that is Canadian equity property (other than any property described in paragraph (i) of the definition Canadian investment property in subsection 2400(1)) owned by the insurer at any time in the year;
      F
      is the total value for the year of the insurer’s Canadian investment property (other than any property described in paragraph (i) of the definition Canadian investment property in subsection 2400(1)) for the year that is Canadian equity property that is designated insurance property of the insurer for the year;
      G
      is the positive or negative amount, as the case may be, determined in respect of the insurer for the year under subsection (4) in respect of foreign investment property owned by the insurer at any time in the year;
      G.1
      is the positive or negative amount, as the case may be, determined in respect of the insurer for the year under subsection (4.1) in respect of foreign investment property disposed of by the insurer in the year or a preceding taxation year;
      H
      is the total value for the year of foreign investment property (other than any property described in paragraph (e) of the definition investment property in subsection 2400(1)) owned by the insurer at any time in the year; and
      J
      is the total value for the year of the insurer’s foreign investment property (other than any property described in paragraph (e) of the definition investment property in subsection 2400(1)) that is designated insurance property of the insurer for the year.
  • (4) The positive or negative amount, as the case may be, determined under this subsection in respect of an insurer for a taxation year in respect of property shall be the amount determined by the formula

    A - B

    where

    A
    is the total of the following amounts determined in respect of the property for the year, or that would be determined in respect of the property for the year if the property were designated insurance property of the insurer in respect of an insurance business in Canada for each taxation year in which the property was held by the insurer:
    • (a) the insurer’s gross investment revenue for the year (other than taxable dividends that were or would be deductible in computing the insurer’s taxable income for the year under section 112 or subsection 138(6) of the Act) derived from the property,

    • (b) [Repealed, SOR/2009-222, s. 4]

    • (c) all amounts that were or would be included in computing the insurer’s taxable capital gains for the year from the disposition of the property,

    • (c.1) all amounts that were or would be included under paragraph 142.4(5)(e) of the Act in respect of the property in computing the insurer’s income for the year,

    • (d) all amounts that were or would be included in computing the insurer’s income for the year as gains from the disposition of such of the property as is not capital property or a specified debt obligation (as defined in subsection 142.2(1) of the Act),

    • (e) all amounts that were or would be included in computing the insurer’s income for the year under subsection 13(1) of the Act in respect of the property,

    • (f) all amounts that were or would be included in computing the insurer’s income for the year under paragraph 12(1)(d), (d.1) or (i) of the Act in respect of the property,

    • (g) all amounts that were or would be included in computing the insurer’s income for the year under subsection 59(3.2) or (3.3) of the Act in respect of the property, and

    • (h) [Repealed, 2016, c. 12, s. 80]

    • (i) all other amounts that were or would be included in computing the insurer’s income for the year in respect of the property otherwise than because of subsection 142.4(4) of the Act; and

    B
    is the total of the following amounts determined in respect of the property for the year, or that would be determined in respect of the property for the year if the property were designated insurance property of the insurer in respect of an insurance business in Canada for each taxation year in which the property was held by the insurer:
    • (a) all amounts that were or would be included in computing the insurer’s allowable capital losses for the year from the disposition of the property,

    • (a.1) all amounts that were or would be deductible under paragraph 142.4(5)(f) of the Act in respect of the property in computing the insurer’s income for the year,

    • (b) all amounts that were or would be deductible in computing the insurer’s income for the year as losses from the disposition of such of the property as is not capital property or a specified debt obligation (as defined in subsection 142.2(1) of the Act),

    • (c) [Repealed, SOR/2009-222, s. 4]

    • (d) all amounts that were or would be deductible in computing the insurer’s income for the year under paragraph 20(1)(a) of the Act in respect of the capital cost of the property or under paragraphs 20(1)(c) and (d) of the Act in respect of interest paid or payable on borrowed money used to acquire the property,

    • (e) where any such property is rental property or leasing property (within the meaning assigned by subsections 1100(14) and (17), respectively), all amounts that were or would be deductible in computing the insurer’s income for the year in respect of expenses directly related to the earning of rental income derived from the property,

    • (f) all amounts that were or would be deductible by the insurer in computing the insurer’s income for the year under paragraph 20(1)(l), (l.1) or (p) of the Act as a reserve or bad debt in respect of the property,

    • (g) all amounts that were deducted or would be deductible in computing the insurer’s income for the year under section 66, 66.1, 66.2 or 66.4 of the Act in respect of the property, and

    • (h) [Repealed, 2016, c. 12, s. 80]

    • (i) all amounts that were or would be deductible in computing the insurer’s income for the year in respect of other expenses directly related to the earning of gross investment revenue derived from the property.

  • (4.1) The positive or negative amount, as the case may be, determined under this subsection in respect of an insurer for a taxation year in respect of property disposed of by the insurer in the year or a preceding taxation year is the amount determined by the formula

    A - B

    where

    A
    is the total of the amounts included under paragraphs 142.4(4)(a) and (c) of the Act in the insurer’s income for the year in respect of the property, or that would be so included if the property were designated insurance property of the insurer in respect of an insurance business in Canada for each taxation year in which it was held by the insurer; and
    B
    is the total of the amounts deductible under paragraphs 142.4(4)(b) and (d) of the Act in respect of the property in computing the insurer’s income for the year, or that would be so deductible if the property were designated insurance property of the insurer in respect of an insurance business in Canada for each taxation year in which it was held by the insurer.
  • (5) [Repealed, SOR/2009-222, s. 4]

  • (6) For the purposes of subsection (1), the balance of an insurer’s cumulative excess account at the end of a taxation year shall be determined as the amount, if any, by which

    • (a) the aggregate of all amounts each of which is a positive amount, if any, determined in respect of each of such of its seven immediately preceding taxation years that began after June 17, 1987 and ended after 1987 by the formula

      B - A

      where A and B are the amounts determined under subsection (1) in respect of the insurer for such immediately preceding taxation year,

    exceeds

    • (b) the aggregate of all amounts each of which is an amount claimed by the insurer under subsection (1) in respect of its cumulative excess account for a preceding taxation year that can be attributed to a positive amount determined under paragraph (a) for that year and, for the purpose of this paragraph, a positive amount determined in respect of a taxation year shall be deemed to have been claimed before a positive amount determined in respect of any subsequent taxation year.

  • (7) [Repealed, SOR/2000-413, s. 6]

  • (8) For the purposes of this section, foreign investment property of an insurer means investment property of the insurer (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 not Canadian investment property of the insurer.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/90-661, s. 10;
  • SOR/92-681, s. 3(F);
  • SOR/94-686, ss. 19(F), 69(F);
  • SOR/2000-413, s. 6;
  • SOR/2005-393, s. 1;
  • SOR/2009-222, s. 4;
  • 2016, c. 12, s. 80.
 
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