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

Regulations are current to 2014-06-12 and last amended on 2014-05-16. Previous Versions

Prescribed Benefit

  •  (1) Subject to subsection (2), for the purpose of subsection 6(4) of the Act, the amount prescribed for a taxation year in respect of insurance under a group term life insurance policy on the life of a taxpayer is the total of

    • (a) the taxpayer’s term insurance benefit under the policy for the calendar year in which the taxation year ends,

    • (b) the taxpayer’s prepaid insurance benefit under the policy for that calendar year, and

    • (c) the total of all sales and excise taxes payable in respect of premiums paid under the policy in that calendar year for insurance on the life of the taxpayer, other than

      • (i) taxes paid, directly or by way of reimbursement, by the taxpayer, and

      • (ii) taxes in respect of premiums for term insurance that, if the taxpayer were to die, would be paid otherwise than

        • (A) to the taxpayer,

        • (B) for the benefit of the taxpayer,

        • (C) as a benefit that the taxpayer desired to have conferred on any person.

Bankrupt Individual

  • (2) Where a taxpayer who has become a bankrupt has two taxation years ending in a calendar year, for the purpose of subsection 6(4) of the Act, the amount prescribed for the first taxation year in respect of insurance under a group term life insurance policy on the life of the taxpayer is nil.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/97-494, s. 1.

Term Insurance Benefit

Amount of Benefit

  •  (1) Subject to section 2704, for the purpose of paragraph 2701(1)(a), a taxpayer’s term insurance benefit under a group term life insurance policy for a calendar year is

    • (a) where

      • (i) the policyholder elects to determine, under this paragraph, the term insurance benefit for the year of each individual whose life is insured under the policy,

      • (ii) no premium rate that applies for term insurance provided under the policy on the life of an individual in respect of the year depends on the age or sex of the individual,

      • (iii) no amounts are payable under the policy for term insurance on the lives of individuals in respect of the year other than premiums payable on a regular basis that are based on the amount of term insurance in force in the year for each individual, and

      • (iv) the year is after 1995,

      the amount determined by the formula

      A - B

      where

      A 
      is the total of the premiums payable for term insurance provided under the policy on the taxpayer’s life in respect of periods in the year, to the extent that each such premium is in respect of term insurance that, if the taxpayer died in the year, would be paid to or for the benefit of the taxpayer or as a benefit that the taxpayer desired to have conferred on any person, and
      B 
      is the total amount paid by the taxpayer in respect of term insurance under the policy on the taxpayer’s life in respect of the year; and
    • (b) in any other case, the amount, if any, by which

      • (i) the total of all amounts each of which is, for a day in the year on which term insurance is in effect under the policy on the taxpayer’s life, the amount determined by the formula

        A × B

        where

        A 
        is the amount of term insurance in effect on that day under the policy on the taxpayer’s life, except the portion, if any, of the amount that, if the taxpayer were to die on that day, would be paid otherwise than
        • (A) to the taxpayer,

        • (B) to benefit of the taxpayer, or

        • (C) as a benefit that the taxpayer desired to have conferred on any person, and

        B 
        is the average daily cost of insurance for the year for the premium category in which the taxpayer is included on that day

      exceeds

      • (ii) the total amount paid by the taxpayer in respect of term insurance under the policy on the taxpayer’s life in respect of the year.

Average Daily Cost of Insurance

  • (2) The average daily cost of insurance under a group term life insurance policy for a calendar year for a premium category is

    • (a) subject to paragraph (b), the amount determined by the formula

      (A + B - C) / D

      where

      A 
      is the total of the premiums payable for term insurance provided under the policy on the lives of individuals in respect of periods in the year while they are in the premium category,
      B 
      is the total of the amounts paid in the year under the policy for term insurance in respect of periods in preceding years (other than amounts that have otherwise been taken into account for the purpose of subsection 6(4) of the Act), to the extent that the total can reasonably be considered to relate to term insurance provided on the lives of individuals in the premium category,
      C 
      is the total amount of policy dividends and experience rating refunds paid in the year under the policy and not distributed to individuals whose lives are insured under the policy, to the extent that the total can reasonably be considered to relate to term insurance provided on the lives of individuals in the premium category, and
      D 
      is the total of all amounts each of which is the amount of term insurance in force on a day in the year on the lives of individuals in the premium category on that day; or
    • (b) the amount that the policyholder determines using a reasonable method that is substantially similar to the method set out in paragraph (a).

Survivor Income Benefits

  • (3) For the purposes of this section, where the proceeds of term insurance on the life of an individual are payable in the form of periodic payments, and the periodic payments are not an optional form of settlement of a lump-sum amount, the amount of term insurance in effect on the individual’s life on any day is the present value, on that day, of the periodic payments that would be made if the individual were to die on that day.

Determination of Present Value

  • (4) For the purpose of subsection (3), the present value on a day in a calendar year

    • (a) shall be determined using assumptions that are reasonable at some time in the year; and

    • (b) may be determined assuming that an individual on whose life the present value depends is the same age on that day as on another day in the year.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/97-494, s. 1.