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

Regulations are current to 2016-06-21 and last amended on 2016-02-26. Previous Versions

  •  (1) For the purpose of subsection 227(4.2) of the Act, prescribed security interest, in relation to an amount deemed by subsection 227(4) of the Act to be held in trust by a person, means that part of a mortgage securing the performance of an obligation of the person, that encumbers land or a building, where the mortgage is registered pursuant to the appropriate land registration system before the time the amount is deemed to be held in trust by the person.

  • (2) For the purpose of subsection (1), where, at any time after 1999, the person referred to in subsection (1) fails to pay an amount deemed by subsection 227(4) of the Act to be held in trust by the person, as required under the Act, the amount of the prescribed security interest referred to in subsection (1) is deemed not to exceed the amount by which the amount, at that time, of the obligation outstanding secured by the mortgage exceeds the total of

    • (a) all amounts each of which is the value determined at the time of the failure, having regard to all the circumstances including the existence of any deemed trust for the benefit of Her Majesty pursuant to subsection 227(4) of the Act, of all the rights of the secured creditor securing the obligation, whether granted by the person or not, including guarantees or rights of set-off but not including the mortgage referred to in subsection (1), and

    • (b) all amounts applied after the time of the failure on account of the obligation,

    so long as any amount deemed under any enactment administered by the Minister, other than the Excise Tax Act, to be held in trust by the person, remains unpaid.

  • (3) For greater certainty, a prescribed security interest includes the amount of insurance or expropriation proceeds relating to land or a building that is the subject of a registered mortgage interest, adjusted after 1999 in accordance with subsection (2), but does not include a lien, a priority or any other security interest created by statute, an assignment or hypothec of rents or leases, or a mortgage interest in any equipment or fixtures that a mortgagee or any other person has the right absolutely or conditionally to remove or dispose of separately from the land or building.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/99-322, s. 2.

PART XXIIIPrincipal Residences

 Any election by a taxpayer under subparagraph 40(2)(c)(ii) of the Act shall be made by attaching to the return of income required by section 150 of the Act to be filed by him for his taxation year in which the disposition of the land, including the property that was his principal residence, occurred, a letter signed by the taxpayer

  • (a) stating that he is electing under that subparagraph;

  • (b) stating the number of taxation years ending after the acquisition date (within the meaning assigned by paragraph 40(2)(b) of the Act) for which the property was his principal residence and during which he was resident in Canada; and

  • (c) giving a description of the property sufficient to identify it with the property designated as his principal residence.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/80-681, s. 1.

 Any designation by a taxpayer under subparagraph 54(g)(iii) of the Act shall be made in the return of income required by section 150 of the Act to be filed by him for any taxation year of the taxpayer in which

  • (a) he has disposed of a property that is to be designated as his principal residence; or

  • (b) he has granted an option to acquire such property.

PART XXIVInsurers

Definitions

  •  (1) The definitions in this subsection apply in this Part.

    attributed surplus

    attributed surplus of a non-resident insurer for a taxation year is the total of

    • (a) the insurer’s property and casualty surplus for the year, and

    • (b) either,

      • (i) if the insurer elects for the year in prescribed form and manner, 50% of the total of

        • (A) the amount that would have been determined at the end of the year in respect of the insurer under subparagraph (a)(ii) of the definition Canadian investment fund, and

        • (B) the amount that would have been determined at the end of the preceding taxation year in respect of the insurer under subparagraph (a)(ii) of the definition Canadian investment fund,

        each amount being calculated as if throughout the year and the preceding taxation year the insurer had been a life insurer resident in Canada and had not carried on any insurance business other than a life insurance business or an accident and sickness insurance business, or

      • (ii) if the insurer does not elect under subparagraph (i) for the year, 120% of the total of all amounts each of which is 50% of the amount determined in accordance with regulations or guidelines made under Part XIII of the Insurance Companies Act to be the margin of assets in Canada over liabilities in Canada required to be maintained by the insurer as at the end of the year or as at the end of the preceding taxation year in respect of an insurance business carried on in Canada (other than a property and casualty insurance business). (surplus attribué)

    Canadian business property

    Canadian business property of an insurer for a taxation year in respect of an insurance business means

    • (a) if the insurer was resident in Canada throughout the year and did not carry on an insurance business outside Canada in the year, property used or held by it in the year in the course of carrying on the business in Canada; and

    • (b) in any other case, designated insurance property of the insurer for the year in respect of the business. (bien d’entreprise canadien)

    Canadian equity property

    Canadian equity property of a person or partnership (in this definition referred to as the taxpayer) at any time means property of the taxpayer that is

    • (a) a share of the capital stock of, or an income bond, income debenture, small business development bond or small business bond issued by, a person (other than a corporation affiliated with the taxpayer) resident in Canada or a Canadian partnership; or

    • (b) that proportion of property that is shares of the capital stock of an entity that is a corporation affiliated with the taxpayer or an interest in an entity that is a partnership or trust that

      • (i) the total value for the taxation year or fiscal period of the entity that includes that time of Canadian equity property of the entity

      is of

      • (ii) the total value for the year or period of all property of the entity. (avoir canadien)

    Canadian investment fund

    Canadian investment fund of an insurer at the end of a taxation year means

    • (a) in the case of a life insurer resident in Canada, the total of

      • (i) the amount determined by the formula

        A - B

        where

        A 
        is the amount of the insurer’s Canadian reserve liabilities as at the end of the year (to the extent that the amount exceeds the amount of surplus appropriations included in that amount), and
        B 
        is the amount of the insurer’s Canadian outstanding premiums and policy loans as at the end of the year (to the extent that the amount of the premiums and loans are in respect of policies referred to in paragraphs (a) to (c) of the description of A in the definition Canadian reserve liabilities and were not otherwise deducted in computing the amount of the insurer’s Canadian reserve liabilities as at the end of the year), and
      • (ii) the greater of

        • (A) the amount determined by the formula

          C + ((D - E + F) x (G / H))

          where

          C 
          is 8% of the amount determined under subparagraph (i),
          D 
          is the total of all amounts each of which is the amount of a deferred realized net gain or an amount expressed as a negative number of a deferred realized net loss of the insurer as at the end of the year,
          E 
          is the total of all amounts each of which is the amount of an item reported as an asset that is owned by the insurer at the end of the year and is a share of the capital stock of, or a debt owing to the insurer by, a financial institution affiliated with the insurer,
          F 
          is the total of all amounts each of which is the amount as at the end of the year of a debt assumed or incurred by the insurer in respect of the acquisition of an asset described in E (or another property for which an asset described in E is a substituted property),
          G 
          is the amount of the insurer’s weighted Canadian liabilities as at the end of the year, and
          H 
          is the amount of the insurer’s weighted total liabilities as at the end of the year, and
        • (B) the amount determined by the formula

          (I - J + K + L) x (M / N)

          where

          I 
          is the total of all amounts each of which is the amount of an item reported as an asset of the insurer as at the end of the year (other than an item that at no time in the year was used or held by the insurer in the course of carrying on an insurance business),
          J 
          is the total of all amounts each of which is the amount of an item reported as a liability of the insurer (other than a liability that was at any time in the year connected with an asset that was not used or held by the insurer in the course of carrying on an insurance business at any time in the year) as at the end of the year in respect of an insurance business carried on by the insurer in the year,
          K 
          is the total of all amounts each of which is an amount of an item reported by the insurer as at the end of the year as a general provision or allowance for impairment in respect of investment property of the insurer for the year,
          L 
          is the total of all amounts each of which is an amount of a deferred realized net gain or an amount expressed as a negative number of a deferred realized net loss of the insurer as at the end of the year,
          M 
          is the amount of the insurer’s weighted Canadian liabilities as at the end of the year, and
          N 
          is the amount of the insurer’s weighted total liabilities as at the end of the year; and
    • (b) in the case of a non-resident insurer, the total of

      • (i) the amount, if any, by which the amount of the insurer’s Canadian reserve liabilities as at the end of the year exceeds the total of

        • (A) the amount of the insurer’s Canadian outstanding premiums and policy loans (to the extent that the amount of the premiums or loans are in respect of policies referred to in paragraphs (a) to (c) of the description of A in the definition Canadian reserve liabilities and were not otherwise deducted in computing the amount of the insurer’s Canadian reserve liabilities as at the end of the year), and

        • (B) the amount of the insurer’s deferred acquisition expenses as at the end of the year in respect of its property and casualty insurance business carried on in Canada, and

      • (ii) the greatest of

        • (A) the total of

          • (I) 8% of the amount determined under subparagraph (i), and

          • (II) the total of all amounts each of which is an amount of a deferred realized net gain or an amount expressed as a negative number of a deferred realized net loss of the insurer as at the end of the year in respect of an insurance business carried on by the insurer in Canada,

        • (B) the amount, if any, by which the total of

          • (I) the amount of the insurer’s surplus funds derived from operations as at the end of its preceding taxation year,

          • (II) the total determined under subclause (A)(II) to the extent not included in subclause (I), and

          • (III) the total of all amounts in respect of which the insurer made an election under subsection 219(4) or (5.2) of the Act, each of which is an amount included in the total determined in respect of the insurer under subparagraph 219(4)(a)(i.1) of the Act as at the end of its preceding taxation year

          exceeds

          • (IV) the total of amounts determined in respect of the insurer under subparagraphs 219(4)(a)(ii), (iii), (iv) and (v) of the Act, as at the end of the year, and

        • (C) the total of

          • (I) the amount of the insurer’s attributed surplus for the year, and

          • (II) if the amount under subclause (I) was determined without the taxpayer electing under subparagraph (b)(i) of the definition attributed surplus, the amount determined under subclause (A)(II). (fonds de placement canadien)

    Canadian investment property

    Canadian investment property of an insurer for a taxation year means an investment property of the insurer for the year (other than, if the insurer is non-resident, property established by the insurer as not being effectively connected with its insurance businesses carried on in Canada in the year) that is, at any time in the year,

    • (a) real property situated in Canada;

    • (b) depreciable property situated in Canada or leased to a person resident in Canada for use inside and outside of Canada;

    • (c) a mortgage, a hypothec, an agreement of sale or any other form of indebtedness in respect of property described in paragraph (a) or (b);

    • (d) a Canadian equity property;

    • (e) a Canadian resource property;

    • (f) a deposit balance of the insurer that is in Canadian currency;

    • (g) a bond, debenture or other form of indebtedness, in Canadian currency, issued by

      • (i) a person resident in Canada or a Canadian partnership, or

      • (ii) the government of Canada, a province or any of their political subdivisions;

    • (h) a property that is

      • (i) a share of the capital stock of a corporation resident in Canada that is affiliated with the insurer, if at least 75% of the total value for the year of all property of the corporation is attributable to property that would be Canadian investment property if it were owned by an insurer, or

      • (ii) an interest in a Canadian partnership, or a trust resident in Canada, if at least 75% of the total value for the year of all property of the partnership or trust, as the case may be, is attributable to property that would be Canadian investment property if it were owned by an insurer; or

    • (i) an amount due or an amount accrued to the insurer on account of income that

      • (i) is from designated insurance property for the year that is Canadian investment property of the insurer for the year because of any of paragraphs (a) to (h), and

      • (ii) was assumed in computing the insurer’s Canadian reserve liabilities for the year. (bien de placement canadien)

    Canadian outstanding premiums

    Canadian outstanding premiums of an insurer at any time means the total of all amounts each of which is the amount of an outstanding premium of the insurer with respect to an insurance policy at that time, to the extent that the amount of the premium has been assumed to have been paid in computing the insurer’s Canadian reserve liabilities as at that time. (primes impayées au Canada)

    Canadian reserve liabilities

    Canadian reserve liabilities of an insurer as at the end of a taxation year means the amount determined by the formula

    A – B

    where

    A 
    is the total of the insurer’s liabilities and reserves (other than liabilities and reserves in respect of a segregated fund) as at the end of the year in respect of
    • (a) life insurance policies in Canada,

    • (b) fire insurance policies issued or effected in respect of property situated in Canada, and

    • (c) insurance policies of any other class covering risks ordinarily within Canada at the time the policy was issued or effected; and

    B 
    is the total of the reinsurance recoverable reported as a reinsurance asset by the insurer as at the end of the year relating to its liabilities and reserves in A. (passif de réserve canadienne)
    deposit balance

    deposit balance of an insurer means an amount standing to the insurer’s credit as or on account of amounts deposited with a corporation authorized to accept deposits or to carry on the business of offering to the public its services as a trustee. (solde de dépôt)

    equity limit

    equity limit of an insurer for a taxation year means

    • (a) in respect of a life insurer resident in Canada, that proportion of the total of all amounts each of which is the value for the year of an equity property of the insurer that

      • (i) the insurer’s weighted Canadian liabilities as at the end of the year

      is of

      • (ii) the insurer’s weighted total liabilities as at the end of the year;

    • (b) in respect of a non-resident insurer (other than a life insurer), 25% of the total of

      • (i) the amount, if any, by which the insurer’s mean Canadian reserve liabilities for the year exceeds 50% of the total of its premiums receivable and deferred acquisition expenses as at the end of the year and its premiums receivable and deferred acquisition expenses as at the end of its preceding taxation year to the extent that those amounts were included in the insurer’s Canadian reserve liabilities for the year or the preceding taxation year, as the case may be, in respect of the insurer’s business in Canada, and

      • (ii) the insurer’s property and casualty surplus for the year; and

    • (c) in respect of a non-resident life insurer, the total of

      • (i) either,

        • (A) if the insurer makes an election referred to in subparagraph (b)(i) of the definition attributed surplus for the year, the greater of

          • (I) that proportion of the total of all amounts each of which is the value for the year of an equity property of the insurer that

            1. the insurer’s weighted Canadian liabilities as at the end of the year

            is of

            2. the insurer’s weighted total liabilities as at the end of year, and

          • (II) 8% of the insurer’s mean Canadian investment fund for the year, or

        • (B) if the insurer does not make this election for the year, 8% of the insurer’s mean Canadian investment fund for the year,

      • (ii) 25% of the amount, if any, by which

        • (A) the insurer’s mean Canadian reserve liabilities for the year (determined on the assumption that the insurer’s property and casualty insurance business carried on in Canada during the year was its only insurance business carried on in Canada that year) exceeds

        • (B) 50% of the total of its premiums receivable and deferred acquisition expenses as at the end of the year and its premiums receivable and deferred acquisition expenses as at the end of its preceding taxation year, to the extent that those amounts were included in the insurer’s Canadian reserve liabilities as at the end of the year or the preceding taxation year, as the case may be, (determined on the assumption that the insurer’s property and casualty insurance business carried on in Canada during the year was its only insurance business carried on in Canada that year), and

      • (iii) 25% of the insurer’s property and casualty surplus for the year. (plafond des avoirs)

    equity property

    equity property of a person or partnership (in this definition referred to as the “taxpayer”) at any time means property of the taxpayer that is

    • (a) a share of the capital stock of, or an income bond, income debenture, small business development bond or small business bond issued by, another person (other than a corporation affiliated with the taxpayer) or partnership; or

    • (b) that proportion of property that is shares of the capital stock of a corporation affiliated with the taxpayer or an interest in a partnership or trust that

      • (i) the total value for the taxation year or fiscal period of the corporation, partnership or trust that includes that time of equity property of the corporation, partnership or trust, as the case may be,

      is of

      • (ii) the total value for the year or period of all property of the corporation, partnership or trust, as the case may be. (avoir)

    financial institution

    financial institution means a corporation that is

    • (a) a corporation described in any of paragraphs (a) to (e) of the definition restricted financial institution in subsection 248(1) of the Act; or

    • (b) a particular corporation all or substantially all of the value of the assets of which is attributable to shares or indebtedness of one or more corporations described in paragraph (a) to which the particular corporation is affiliated. (institution financière)

    foreign policy loan

    foreign policy loan means an amount advanced by an insurer to a policyholder in accordance with the terms and conditions of a life insurance policy, other than a life insurance policy in Canada. (avance sur police étrangère)

    gross Canadian life investment income

    gross Canadian life investment income of a life insurer for a taxation year means the amount, if any, by which

    • (a) the total of all amounts each of which is

      • (i) the insurer’s gross investment revenue for the year, to the extent that the revenue is from Canadian business property of the insurer for the year in respect of the insurer’s life insurance business,

      • (ii) the amount included in computing the insurer’s income for the year under paragraph 138(9)(b) of the Act,

      • (iii) the portion of the amount deducted under paragraph 20(1)(l) of the Act in computing the insurer’s income for its preceding taxation year that was in respect of Canadian business property of the insurer for that year in respect of the insurer’s life insurance business,

      • (iv) the amount included under section 142.4 of the Act in computing the insurer’s income for the year in respect of property disposed of by the insurer that was, in the taxation year of disposition, Canadian business property of the insurer for that year in respect of the insurer’s life insurance business,

      • (v) the insurer’s gain for the year from the disposition of a Canadian business property of the insurer for the year in respect of the insurer’s life insurance business, other than a capital property or a property in respect of the disposition of which section 142.4 of the Act applies, or

      • (vi) the insurer’s taxable capital gain for the year from the disposition of a Canadian business property of the insurer for the year in respect of the insurer’s life insurance business

      exceeds

    • (b) the total of all amounts each of which is

      • (i) the portion of the amount deducted under paragraph 20(1)(l) of the Act in computing the insurer’s income for the year that is in respect of Canadian business property of the insurer for the year in respect of the insurer’s life insurance business,

      • (ii) the amount deductible under section 142.4 of the Act in computing the insurer’s income for the year in respect of a property disposed of by the insurer that was, in the taxation year of disposition, a Canadian business property of the insurer for that year in respect of the insurer’s life insurance business,

      • (iii) the insurer’s loss for the year from the disposition of a Canadian business property of the insurer for the year in respect of the insurer’s life insurance business, other than a capital property or a property in respect of the disposition of which section 142.4 of the Act applies, or

      • (iv) the insurer’s allowable capital loss for the year from the disposition of a Canadian business property of the insurer for the year in respect of the insurer’s life insurance business. (revenus bruts de placements en assurance-vie au Canada)

    investment property

    investment property of an insurer for a taxation year means non-segregated property owned by the insurer, other than a policy loan payable to the insurer, at any time in the year that is

    • (a) property acquired by the insurer for the purpose of earning gross investment revenue in the year, other than property that is

      • (i) property, a proportion of which is investment property of the insurer for the year because of paragraph (b),

      • (ii) a share of the capital stock of, or a debt owing to the insurer by, a corporation affiliated with the insurer, or

      • (iii) an interest in a partnership or trust;

    • (b) that proportion, if any, of property of the insurer that is land, depreciable property or property that would have been depreciable property if it had been situated in Canada and used or held by the insurer in the year in the course of carrying on an insurance business in Canada that

      • (i) the use made of the property by the insurer in the year for the purpose of earning gross investment revenue in the year

      is of

      • (ii) the whole use made of the property by the insurer in the year;

    • (c) if the insurer is a life insurer, property described in any of paragraphs 138(4.4)(a) to (d) of the Act;

    • (d) either

      • (i) a share of the capital stock of, or a debt owing to the insurer by, a corporation (other than a corporation that is a financial institution) affiliated with the insurer, if the total value for the year of all investment property of the corporation for the year is not less than 75% of the total value for the year of all its property, or

      • (ii) an interest in a partnership or trust, if the total value for the year of all investment property of the partnership or trust, as the case may be, for the year is not less than 75% of the total value for the year of all its property,

      and for the purpose of this paragraph (other than for the purpose of determining whether a corporation is a financial institution) every corporation, partnership and trust is deemed to be an insurer; or

    • (e) an amount due or an amount accrued to the insurer on account of income that

      • (i) is from designated insurance property for the year that is investment property of the insurer for the year because of any of paragraphs (a) to (d), and

      • (ii) was assumed in computing the insurer’s Canadian reserve liabilities for the year. (bien de placement)

    mean Canadian outstanding premiums

    mean Canadian outstanding premiums of an insurer for a taxation year means 50% of the total of

    • (a) its Canadian outstanding premiums as at the end of the year, and

    • (b) its Canadian outstanding premiums as at the end of its preceding taxation year. (moyenne des primes impayées au Canada

    mean Canadian reserve liabilities

    mean Canadian reserve liabilities of an insurer for a taxation year means 50% of the total of

    • (a) its Canadian reserve liabilities as at the end of the year, and

    • (b) its Canadian reserve liabilities as at the end of its preceding taxation year. (moyenne du passif de réserve canadienne)

    mean maximum tax actuarial reserve

    mean maximum tax actuarial reserve in respect of a particular class of life insurance policies of an insurer for a taxation year means 50% of the total of

    • (a) its maximum tax actuarial reserve for that class of policies for the year, and

    • (b) its maximum tax actuarial reserve for that class of policies for its preceding taxation year. (provision actuarielle maximale moyenne aux fins d’impôt)

    mean policy loans

    mean policy loans of an insurer for a taxation year means 50% of the total of

    • (a) its policy loans as at the end of the year, and

    • (b) its policy loans as at the end of its preceding taxation year. (moyenne des avances sur police)

    outstanding premiums

    outstanding premiums of an insurer with respect to an insurance policy at any time means premiums due to the insurer under the policy at that time but unpaid. (primes impayées)

    property and casualty surplus

    property and casualty surplus of an insurer for a taxation year means the total of

    • (a) 7.5% of the total of

      • (i) its unearned premium reserve as at the end of the year (net of reinsurance recoverables in respect of the reserve) in respect of its property and casualty insurance business,

      • (ii) its unearned premium reserve as at the end of its preceding taxation year (net of reinsurance recoverables in respect of the reserve) in respect of its property and casualty insurance business,

      • (iii) its provision for unpaid claims and adjustment expenses as at the end of the year (net of reinsurance recoverables in respect of the provision) in respect of its property and casualty insurance business, and

      • (iv) its provision for unpaid claims and adjustment expenses as at the end of its preceding taxation year (net of reinsurance recoverables in respect of the provision) in respect of its property and casualty insurance business, and

    • (b) 50% of the total of

      • (i) its investment valuation reserve as at the end of the year in respect of its property and casualty insurance business, and

      • (ii) its investment valuation reserve as at the end of its preceding taxation year in respect of its property and casualty insurance business. (excédent provenant de l’assurance de dommages)

    reinsurance recoverable

    reinsurance recoverable of an insurer means the total of all amounts each of which is an amount reported as a reinsurance asset of the insurer as at the end of a taxation year in respect of an amount recoverable from a reinsurer. (montant à recouvrer au titre de la réassurance)

    value

    value for a taxation year of a property of a person or partnership (in this definition referred to as the “owner”) means

    • (a) in the case of a property that is a mortgage, hypothec, an agreement of sale or an investment property that is a deposit balance, the amount, if any, by which

      • (i) the amount obtained when the gross investment revenue of the owner for the year from the property is divided by the average rate of interest earned by the owner (expressed as an annual rate) on the amortized cost of the property during the year

      exceeds

      • (ii) the amount obtained when the interest payable by the owner, for the period in the year during which the property was held by the owner, on debt assumed or incurred by the owner in respect of the acquisition of the property (or another property for which the property is a substituted property) is divided by the average rate of interest payable by the owner (expressed as an annual rate) on the debt for the year;

    • (b) in the case of a property that is an amount due or an amount accrued to the owner, the total of the amounts due or accrued at the end of each day in the year divided by the number of days in the year;

    • (c) in the case of a property (other than a property referred to in paragraph (a) or (b)) that was not owned by the owner throughout the year, the amount, if any, by which

      • (i) that proportion of

        • (A) the carrying value of the property as at the end of the preceding taxation year, if the property was owned by the owner at that time,

        • (B) the carrying value of the property as at the end of the year, if the property was owned by the owner at that time and not at the end of the preceding taxation year, and

        • (C) in any other case, the cost of the property to the owner when it was acquired,

        that the number of days that are in the year and at the end of which the owner owned the property is of the number of days in the year,

      exceeds

      • (ii) the amount obtained when the interest payable by the owner, for the period in the year during which the property was held by the owner, on debt assumed or incurred by the owner in respect of the acquisition of the property (or another property for which the property is a substituted property) is divided by the average rate of interest payable by the owner (expressed as an annual rate) on the debt for the year; and

    • (d) in the case of any other property, the amount, if any, by which

      • (i) 50% of the total of

        • (A) the carrying value of the property as at the end of the year, and

        • (B) the carrying value of the property as at the end of the preceding taxation year

        exceeds

      • (ii) the amount obtained when the interest payable by the owner, for the period in the year during which the property was held by the owner, on debt assumed or incurred by the owner in respect of the acquisition of the property (or another property for which the property is a substituted property) is divided by the average rate of interest payable by the owner (expressed as an annual rate) on the debt for the year. (valeur)

    weighted Canadian liabilities

    weighted Canadian liabilities of an insurer as at the end of a taxation year means the total of

    • (a) 300% of the amount, if any, by which

      • (i) the total of all amounts each of which is an amount that is in respect of an insurance business carried on by the insurer in Canada and that is reported as a liability (other than a liability in respect of an amount payable out of a segregated fund) of the insurer in respect of a life insurance policy in Canada (other than an annuity) or an accident and sickness insurance policy as at the end of the year

      exceeds

      • (ii) the total of

        • (A) the insurer’s policy loans (other than policy loans in respect of annuities) as at the end of the year, and

        • (B) the reinsurance recoverable reported by the insurer as at the end of the year relating to its liabilities described in subparagraph (i), and

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

      • (i) the total of all amounts each of which is an amount in respect of an insurance business carried on by the insurer in Canada that is reported as a liability of the insurer as at the end of the year, except to the extent that the amount is

        • (A) in respect of an insurance policy (other than an annuity) described in subparagraph (a)(i),

        • (B) a liability in respect of an amount payable out of a segregated fund, or

        • (C) a debt incurred or assumed by the insurer to acquire a property of the insurer,

        exceeds

      • (ii) the total of

        • (A) the insurer’s policy loans in respect of annuities as at the end of the year, and

        • (B) the reinsurance recoverable reported by the insurer as at the end of the year relating to its liabilities described in subparagraph (i). (passif canadien pondéré)

    weighted total liabilities

    weighted total liabilities of an insurer as at the end of a taxation year means the total of

    • (a) 300% of the amount, if any, by which

      • (i) the total of all amounts each of which is an amount that is in respect of an insurance business carried on by the insurer and that is reported as a liability (other than a liability in respect of an amount payable out of a segregated fund) of the insurer in respect of a life insurance policy (other than an annuity) or an accident and sickness insurance policy

      exceeds

      • (ii) the total of

        • (A) the insurer’s policy loans and foreign policy loans (other than policy loans and foreign policy loans in respect of annuities) as at the end of the year, and

        • (B) the reinsurance recoverable reported by the insurer as at the end of the year relating to its liabilities described in subparagraph (i), and

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

      • (i) the total of all amounts each of which is an amount that is in respect of an insurance business carried on by the insurer and that is reported as a liability of the insurer as at the end of the year, except to the extent that the amount is

        • (A) in respect of an insurance policy (other than an annuity) described in subparagraph (a)(i),

        • (B) a liability in respect of an amount payable out of a segregated fund, or

        • (C) a debt incurred or assumed by the insurer to acquire a property of the insurer,

      exceeds

      • (ii) the total of

        • (A) the insurer’s policy loans and foreign policy loans in respect of annuities as at the end of the year, and

        • (B) the reinsurance recoverable reported by the insurer as at the end of the year relating to its liabilities described in subparagraph (i). (passif total pondéré)

Carrying Value

  • (2) For the purposes of this Part, the carrying value of a taxpayer’s property for a taxation year, except as otherwise provided in this Part, means

    • (a) if the taxpayer is an insurer, the amounts reflected in the taxpayer’s non-consolidated balance sheet as at the end of the taxation year accepted (or, if that non-consolidated balance sheet was not prepared, the taxpayer’s non-consolidated balance sheet as at the end of the year that would have been accepted) by the Superintendent of Financial Institutions, in the case of an insurer that is required under the Insurance Companies Act to report to that Superintendent, or by the superintendent of insurance or other similar officer or authority of the province under the laws of which the insurer is incorporated or otherwise formed, in the case of an insurer that is required by law to report to that officer or authority; and

    • (b) in any other case, the amounts that would be reflected in the taxpayer’s non-consolidated balance sheet as at the end of the taxation year if that balance sheet were prepared in accordance with generally accepted accounting principles.

Amount or Item Reported

  • (3) A reference in this Part to an amount or item reported as an asset or a liability of a taxpayer as at the end of a taxation year means an amount or item that is reported as an asset or a liability in the taxpayer’s non-consolidated balance sheet as at the end of the year accepted (or, if that non-consolidated balance sheet was not prepared, the taxpayer’s non-consolidated balance sheet as at the end of the year that would have been accepted) by the Superintendent of Financial Institutions, in the case of an insurer that is required under the Insurance Companies Act to report to that Superintendent, or by the superintendent of insurance or other similar officer or authority of the province under the laws of which the insurer is incorporated or otherwise formed, in the case of an insurer that is required by law to report to that officer or authority.

Application of Certain Definitions

  • (4) For the purposes

    • (a) of subsection 138(14) of the Act, the expressions “Canadian investment fund for a taxation year”, “specified Canadian assets” and “value for the taxation year” have the meanings prescribed for them by subsection 2404(1) as it read in its application to the 1977 taxation year; and

    • (b) of subsection 219(7) of the Act, the expressions “attributed surplus” and “Canadian investment fund” have the meaning prescribed for them by subsection (1).

Deeming Rules for Certain Assets

  • (5) For the purposes of this Part, other than subsection 2401(6), an asset of an insurer is deemed not to have been used or held by the insurer in a taxation year in the course of carrying on an insurance business if the asset

    • (a) is owned by the insurer at the end of the year; and

    • (b) is a share of the capital stock of, or a debt owing to the insurer by, a financial institution affiliated with the insurer during each of the days in the year during which the insurer owned the asset.

  • (6) For the purposes of clause (a)(ii)(B) of the definition Canadian investment fund in subsection (1), an asset of an insurer is deemed not to have been used or held by the insurer in a taxation year in the course of carrying on an insurance business if the asset

    • (a) is owned by the insurer at the end of the year; and

    • (b) is

      • (i) goodwill, or

      • (ii) of the Act if the obligations were insurance policies in Canada, or (ii) real property (or the portion of real property) owned by the insurer and occupied by the insurer for the purposes of carrying on an insurance business.

No Double Counting

  • (7) For greater certainty, a particular property or a particular proportion of a property shall not, directly or indirectly, be used or included more than once in determining, for a particular taxation year, the Canadian equity property or the equity property of a person or partnership.

Transition Year

  • (8) A computation that is required to be made under this Part in respect of an insurer’s taxation year that included September 30, 2006 and that is relevant to a computation (in this subsection referred to as the “transition year computation”) that is required to be made under this Part in respect of the insurer’s first taxation year that begins after that date shall, for the purposes only of the transition year computation, be made using the same definitions, rules and methodologies that are used in the transition year computation.

  • (9) A computation that is required to be made under this Part in respect of an insurer’s taxation year that included December 31, 2010 and that is relevant to a computation (in this subsection referred to as the “transition year computation”) that is required to be made under this Part in respect of the insurer’s first taxation year that begins after that date shall, for the purposes only of the transition year computation, be made using the same definitions, rules and methodologies that are used in the transition year computation.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/79-670, s. 4;
  • SOR/88-392, s. 4;
  • SOR/90-661, s. 6;
  • SOR/94-686, ss. 55(F), 62, 79(F);
  • SOR/2000-413, s. 2;
  • 2009, c. 2, s. 102;
  • 2010, c. 25, s. 81;
  • SOR/2011-188, s. 15.
 
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