Fall Economic Statement Implementation Act, 2022 (S.C. 2022, c. 19)

• (i) the taxpayer’s investment tax credit at the end of the year in respect of property acquired before the end of the year, of the taxpayer’s apprenticeship expenditure for the year or a preceding taxation year, of the taxpayer’s flow-through mining expenditure for the year or a preceding taxation year, of the taxpayer’s flow-through critical mineral mining expenditure for the year or a preceding taxation year, of the taxpayer’s pre-production mining expenditure for the year or a preceding taxation year or of the taxpayer’s SR&ED qualified expenditure pool at the end of the year or at the end of a preceding taxation year, and

• (A) the taxpayer’s investment tax credit at the end of the year in respect of property acquired in a subsequent taxation year, of the taxpayer’s apprenticeship expenditure for a subsequent taxation year, of the taxpayer’s flow-through mining expenditure for a subsequent taxation year, of the taxpayer’s flow-through critical mineral mining expenditure for a subsequent taxation year, of the taxpayer’s pre-production mining expenditure for a subsequent taxation year or of the taxpayer’s SR&ED qualified expenditure pool at the end of the subsequent taxation year to the extent that an investment tax credit was not deductible under this subsection for the subsequent taxation year, and

• (e) that is not an expense that the taxpayer has included under paragraph (a.21) of the definition investment tax credit in the computation of its investment tax credit in respect of which the taxpayer has, at any time, sought a deduction under subsection (5); (dépense minière déterminée)

• (a.21) where the taxpayer is an individual (other than a trust), 30% of the taxpayer’s flow-through critical mineral mining expenditures for the year,

critical mineral

critical mineral means

• (a) copper,

• (b) nickel,

• (c) lithium,

• (d) cobalt,

• (e) graphite,

• (f) a rare earth element,

• (g) scandium,

• (h) titanium,

• (i) gallium,

• (j) vanadium,

• (k) tellurium,

• (l) magnesium,

• (m) zinc,

• (n) a platinum group metal, or

• (o) uranium; (minéral critique)

flow-through critical mineral mining expenditure

flow-through critical mineral mining expenditure of a taxpayer for a taxation year means an expense deemed by subsection 66(12.61) (or by subsection 66(18) as a consequence of the application of subsection 66(12.61) to the partnership, referred to in paragraph (c) of this definition, of which the taxpayer is a member) to be incurred by the taxpayer in the year

• (a) that is a Canadian exploration expense incurred by a corporation after April 7, 2022 in conducting mining exploration activity from or above the surface of the earth primarily targeting critical minerals,

• (b) that

  • (i) is an expense described in paragraph (f) of the definition Canadian exploration expense in subsection 66.1(6), and

  • (ii) is not an expense in respect of

    • (A) trenching, if one of the purposes of the trenching is to carry out preliminary sampling (other than specified sampling),

    • (B) digging test pits (other than for the purpose of carrying out specified sampling), and

    • (C) preliminary sampling (other than specified sampling),

• (c) that is an amount in respect of which is renounced in accordance with subsection 66(12.6) by the corporation to the taxpayer (or a partnership of which the taxpayer is a member) under an agreement described in that subsection and made after April 7, 2022 and on or before March 31, 2027,

• (d) that is not an expense that was renounced under subsection 66(12.6) to the corporation (or a partnership of which the corporation is a member), unless that renunciation was under an agreement described in that subsection and made after April 7, 2022 and on or before March 31, 2027,

• (e) that, in respect of an agreement described in paragraph (c), a qualified professional engineer or professional geoscientist certifies in prescribed form and manner that the expense is to be incurred in accordance with an exploration plan that primarily targets critical minerals if the qualified professional engineer or professional geoscientist

  • (i) completed the certification within the 12-month period immediately preceding the time when the agreement is made, and

  • (ii) acted reasonably, in their professional capacity, in completing the certification, and

• (f) that is not an expense that the taxpayer has included under paragraph (a.2) of the definition investment tax credit in the computation of its investment tax credit in respect of which the taxpayer has, at any time, sought a deduction under subsection (5); (dépense minière de minéral critique déterminée)

qualified professional engineer or professional geoscientist

qualified professional engineer or professional geoscientist means an individual who

• (a) is an engineer or geoscientist with a university degree, or equivalent accreditation, in an area of geoscience, or engineering, relating to mineral exploration or mining,

• (b) has at least five years of experience in mineral exploration, mine development or operation, or mineral project assessment, or any combination of those, that is relevant to their professional degree or area of practice,

• (c) has experience relevant to the subject matter of the exploration plan and the certification described in paragraph (e) of the definition flow-through critical mineral mining expenditure, and

• (d) is registered and in good standing with a professional association that has the authority or recognition by law of a jurisdiction in Canada to regulate the profession of engineering or geoscience in

  • (i) the jurisdiction where the property that is the subject of the exploration plan is located, or

  • (ii) if there is no professional association in the jurisdiction described in subparagraph (i), a jurisdiction in Canada where a professional association regulates the profession of engineering or geoscience; (ingénieur ou géoscientifique professionnel qualifié)

• (c.21) the amount of a taxpayer’s flow-through critical mineral mining expenditure for a taxation year is deemed to be the amount of the taxpayer’s flow-through critical mineral mining expenditure for the year as otherwise determined less the amount of any government assistance or non-government assistance in respect of expenses included in determining the taxpayer’s flow-through critical mineral mining expenditure for the year that, at the time of the filing of the taxpayer’s return of income for the year, the taxpayer has received, is entitled to receive or can reasonably be expected to receive;

• (iii.3) a FHSA,

net asset value

net asset value has the same meaning as in National Instrument 81-102 Investment Funds, as amended from time to time, of the Canadian Securities Administrators; (valeur liquidative)

• Marginal note:Allocation to redeemers

  (5.3) If a trust that is a mutual fund trust throughout a taxation year paid or made payable, at any time in the taxation year, to a beneficiary an amount on a redemption by that beneficiary of a unit of the trust (in this subsection and subsection (5.31) referred to as the “allocated amount”) and the beneficiary’s proceeds from the disposition of that unit do not include the allocated amount, in computing its income for the taxation year no deduction may be made by the trust in respect of

• Marginal note:Allocations by ETFs

  (5.31) If in a taxation year referred to in subsection (5.3)

  • (a) all of the units offered in the taxation year by a mutual fund trust are listed on a designated stock exchange in Canada and are in continuous distribution (in this subsection referred to as “ETF units”), then paragraph 132(5.3)(b) does not apply and, in computing its income for the taxation year, no deduction may be made by the trust in respect of the amount determined by the formula

    A − (B ÷ (C + B) × D)

    where

    A

    is the portion of the total of all allocated amounts for the taxation year in respect of redemptions of ETF units by beneficiaries of the trust during that year that would be, without reference to subsection 104(6), amounts paid out of the taxable capital gains of the trust,

    B

    is the lesser of

    • (i) the total amount paid for redemptions of the ETF units in the taxation year, and

    • (ii) the greater of

      • (A) the amount determined for C, and

      • (B) the net asset value of the trust at the end of the previous taxation year,

    C

    is the net asset value of the trust at the end of the taxation year, and

    D

    is the amount that would be, without reference to subsection 104(6), the trust’s net taxable capital gains (as determined under subsection 104(21.3)) for the taxation year; or

  • (b) units offered by a mutual fund trust include units that are not ETF units (in this paragraph referred to as “non-ETF units”) and units that are ETF units, then

    • (i) in respect of redemptions of ETF units, paragraph (5.3)(b) does not apply and paragraph (a) applies, except that

      • (A) the description of C is to be read as “is the portion of the net asset value of the trust at the end of the taxation year that is referable to the ETF units,”,

      • (B) clause (ii)(B) of the description of B shall be read as “the portion of the net asset value of the trust at the end of the previous taxation year that is referable to the ETF units,”, and

      • (C) the amount determined for D shall be the amount determined by the formula

        E ÷ F × G

        where

        E

        is the portion of the net asset value of the trust at the end of the taxation year that is referable to the ETF units,

        F

        is the net asset value of the trust at the end of the taxation year, and

        G

        is the amount that would be, without reference to subsection 104(6), the trust’s net taxable capital gains (as determined under subsection 104(21.3)) for the taxation year; and

    • (ii) in respect of redemptions of non-ETF units, in addition to the limitation applicable under paragraph (5.3)(b), the total amount of the deductions that may be claimed by the trust for the taxation year for the portion of the allocated amounts described in the description of A in paragraph (5.3)(b) in respect of non-ETF units shall not exceed the amount determined by the formula

      H ÷ I × J

      where

      H

      is the portion of the net asset value of the trust at the end of the taxation year that is referable to the non-ETF units,

      I

      is the net asset value of the trust at the end of the taxation year, and

      J

      is the amount that would be, without reference to subsection 104(6), the trust’s net taxable capital gains (as determined under subsection 104(21.3)) for the taxation year.

• (o) for the purpose of applying subsection 132(5.31) to a fund for a taxation year that includes the transfer time, the following amounts are to be determined as if the taxation year ended immediately before the transfer time:

  • (i) if paragraph 132(5.31)(a) applies, the amounts determined under the descriptions of B, C and D in that paragraph, and

  • (ii) if paragraph 132(5.31)(b) applies,

    • (A) the amounts determined for B and C in paragraph 132(5.31)(a), for the purpose of subparagraph 132(5.31)(b)(i),

    • (B) the amounts determined for D, E, F and G in clause 132(5.31)(b)(i)(C), and

    • (C) the amounts determined for H, I and J in subparagraph 132(5.31)(b)(ii).

• (b) if, in the immediately preceding taxation year, the designated foreign insurance business was not a designated foreign insurance business, for the purposes of paragraph (4)(a), subsection (9), the definition designated insurance property in subsection (12) and paragraphs 12(1)(d) to (e), the life insurer is deemed to have carried on the business in Canada in that immediately preceding year and to have claimed the maximum amounts to which it would have been entitled under subparagraph (3)(a)(i) and paragraphs 20(1)(l) and (l.1) and 20(7)(c) in respect of those specified Canadian risks if that designated foreign insurance business had been a designated foreign insurance business in that immediately preceding year; and

• (i) any amount that the insurer claims as a policy reserve for the year in respect of its groups of life insurance contracts in Canada at the end of the year, not exceeding the total of amounts that the insurer is allowed by regulation to deduct in respect of those groups,

• (a) each amount deducted under subparagraph (3)(a)(i) in computing the insurer’s income for the preceding taxation year;

• (b) the amount prescribed in respect of the insurer for the year in respect of its groups of life insurance contracts in Canada at the end of the year; and

• (j) for the purpose of determining the income of the transferor and the transferee for their taxation years following their taxation years referred to in paragraph (h), amounts deducted by the transferor as reserves under subparagraph (3)(a)(i) and paragraphs 20(1)(l) and (l.1) and 20(7)(c) of this Act and section 33 and paragraph 138(3)(c) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, in its taxation year referred to in paragraph (h) in respect of the transferred property referred to in paragraph (b) or the obligations referred to in paragraph (c) are deemed to have been deducted by the transferee, and not the transferor, for its taxation year referred to in paragraph (h),

• (l) for the purposes of this subsection and subsections (11.7) and (11.9), the fair market value of consideration received by the transferor from the transferee in respect of the assumption or reinsurance of a particular obligation referred to in paragraph (c) is deemed to be the total of the amounts deducted by the transferor as a reserve under subparagraph (3)(a)(i) and paragraph 20(7)(c) in its taxation year referred to in paragraph (h) in respect of the particular obligation, and

• (d) for the purposes of paragraph (4)(a), subsection (9), the definition designated insurance property in subsection (12) and paragraphs 12(1)(d), (d.1) and (e), the insurer is deemed to have carried on the business in Canada in that preceding year and to have claimed the maximum amounts to which it would have been entitled under subparagraph (3)(a)(i) and paragraphs 20(1)(l) and (l.1) and 20(7)(c) for that year,

to a person (in this subsection referred to as the “purchaser”) and obligations in respect of the business or line of business, as the case may be, in respect of which a reserve may be claimed under subparagraph (3)(a)(i) or paragraph 20(7)(c) (in this subsection referred to as the “obligations”) were assumed by the purchaser, the following rules apply:

base year

base year of an insurer means the insurer’s taxation year that immediately precedes its transition year; (année de base)

deposit accounting insurance policy

deposit accounting insurance policy in respect of an insurer’s taxation year means an insurance policy of the insurer that, according to International Financial Reporting Standards, is not an insurance contract for that taxation year; (police d’assurance à comptabilité de dépôt)

excluded policy

excluded policy in respect of an insurer’s base year means an insurance policy of the insurer that would be a deposit accounting insurance policy for the insurer’s base year if International Financial Reporting Standards applied for that base year; (police exclue)

reserve transition amount

reserve transition amount of an insurer, in respect of an insurance business carried on by it in its transition year, means the positive or negative amount determined by the formula

A + B − C − D − E − F + G + H

where

A

is the maximum amount that the insurer would be permitted to claim under subparagraph (3)(a)(i) for its base year in respect of a policy reserve for its groups of life insurance contracts in Canada at the end of the base year if

• (a) the International Financial Reporting Standards that applied to the insurer in valuing its assets and liabilities for its transition year had applied to it for its base year, and

• (b) sections 1404 and 1406 of the Income Tax Regulations were read in respect of the insurer’s base year as they read in respect of its transition year,

B

is the maximum amount that the insurer would be permitted to claim under paragraph 20(7)(c) for its base year in respect of a policy reserve for its groups of insurance contracts at the end of the base year if

• (a) the International Financial Reporting Standards that applied to the insurer in valuing its assets and liabilities for its transition year had applied to it for its base year, and

• (b) sections 1400 and 1402 of the Income Tax Regulations were read in respect of the insurer’s base year as they read in respect of its transition year,

C

is the maximum amount that the insurer is permitted to claim under subparagraphs (3)(a)(i) and (ii) (as they read in their application to taxation years that begin before 2023) as a policy reserve for its base year,

D

is the maximum amount that the insurer is permitted to claim under paragraph 20(7)(c) as a policy reserve for its base year,

E

is the amount that would be included under paragraph (4)(b) in computing the insurer’s income for its base year in respect of its groups of life insurance contracts in Canada at the end of the base year if

• (a) the International Financial Reporting Standards that applied to the insurer in valuing its assets and liabilities for its transition year had applied to it for its base year, and

• (b) sections 1404 and 1406 of the Income Tax Regulations were read in respect of the insurer’s base year as they read in respect of its transition year,

F

is the amount that would be included under paragraph 12(1)(e.1) in computing the insurer’s income for its base year if

• (a) the International Financial Reporting Standards that applied to the insurer in valuing its assets and liabilities for its transition year had applied to it for its base year, and

• (b) sections 1400 and 1402 of the Income Tax Regulations were read in respect of the insurer’s base year as they read in respect of its transition year,

G

is the amount included under paragraph (4)(b) (as it read in its application to taxation years that begin before 2023) in computing the insurer’s income for its base year in respect of its life insurance policies, and

H

is the amount included under paragraph 12(1)(e.1) in computing the insurer’s income for its base year; (montant transitoire)

transition year

transition year of an insurer means the insurer’s first taxation year that begins after 2022. (année transitoire)

contractual service margin

contractual service margin for a group of insurance contracts of an insurer, or a group of reinsurance contracts held by the insurer, at the end of a taxation year, means the greater of the positive or negative amount of the contractual service margin for the group

• (a) that would be reported as at the end of the taxation year if the amount were determined without reference to amounts described in subparagraphs (a)(i) to (iii) of the definition liability for remaining coverage in this subsection, and

• (b) that would be determined at the end of the taxation year in respect of the group in accordance with International Financial Reporting Standards using reasonable assumptions in the circumstances if the amount were determined without reference to amounts described in subparagraphs (a)(i) to (iii) of the definition liability for remaining coverage in this subsection; (marge sur services contractuels)

group of insurance contracts

group of insurance contracts of an insurer means a group of insurance contracts of the insurer, determined according to International Financial Reporting Standards, that is a group for the purposes of determining an amount of the insurer that is reported as at the end of the insurer’s taxation year and, for greater certainty, includes a group of insurance contracts that include reinsurance contracts under which the insurer has assumed reinsurance risk; (groupe de contrats d’assurance)

group of life insurance contracts

group of life insurance contracts of an insurer means a group of life insurance contracts of the insurer, determined according to International Financial Reporting Standards, that is a group for the purposes of determining an amount of the insurer that is reported as at the end of the insurer’s taxation year and, for greater certainty, includes a group of life insurance contracts that include reinsurance contracts under which the insurer has assumed reinsurance risk; (groupe de contrats d’assurance-vie)

group of life insurance contracts in Canada

group of life insurance contracts in Canada of an insurer means a group of life insurance contracts of the insurer that includes only life insurance contracts issued or effected by the insurer on the life of a person resident in Canada at the time the contract was issued or effected; (groupe de contrats d’assurance-vie au Canada)

group of reinsurance contracts

group of reinsurance contracts held by an insurer means a group of reinsurance insurance contracts held by the insurer, determined according to International Financial Reporting Standards, that is a group for the purposes of determining an amount of the insurer that is reported as at the end of the insurer’s taxation year; (groupe de contrats de réassurance)

group of segregated fund policies

group of segregated fund policies of an insurer means a group of insurance contracts of the insurer that includes only segregated fund policies (within the meaning assigned by paragraph 138.1(1)(a)); (groupe de polices à fonds réservé)

liability for incurred claims

liability for incurred claims, for a group of insurance contracts of an insurer at the end of a taxation year, means the lesser of the positive or negative amount of the liability for incurred claims for the group

• (a) that would be reported as at the end of the taxation year if the amount were determined without reference to amounts described in subparagraphs (a)(i) to (iii) of the definition liability for remaining coverage in this subsection, and

• (b) that would be determined at the end of the taxation year in accordance with International Financial Reporting Standards using reasonable assumptions in the circumstances if the amount were determined without reference to amounts described in subparagraphs (a)(i) to (iii) of the definition liability for remaining coverage in this subsection; (passif au titre des sinistres survenus)

liability for remaining coverage

liability for remaining coverage, for a group of insurance contracts of an insurer at the end of a taxation year, means the lesser of the positive or negative amount of the liability for remaining coverage for the group

• (a) that would be reported as at the end of the taxation year if the amount were determined without reference to

  • (i) projected

    • (A) income and capital taxes (other than the tax payable under Part XII.3),

    • (B) taxes on premiums that are not deductible under Part I,

    • (C) amounts not deductible after the taxation year in computing income under Part I, and

    • (D) cash flows in respect of funds withheld arrangements,

  • (ii) amounts payable that are deductible for the taxation year, or a previous taxation year, in computing income under Part I, and

  • (iii) amounts receivable to the extent they have been included for the taxation year, or a previous taxation year, in computing income under Part I, and

• (b) that would be determined at the end of the taxation year in accordance with International Financial Reporting Standards using reasonable assumptions in the circumstances if the amount were determined without reference to amounts described in subparagraphs (a)(i) to (iii); (passif au titre de la couverture restante)

policyholders’ liabilities

policyholders’ liabilities, of an insurer as at the end of a taxation year, means the amount reported as policyholders’ liabilities as at the end of the year; (obligation envers les titulaires de polices)

reinsurance contract held amount

reinsurance contract held amount, for a group of reinsurance contracts held by an insurer at the end of a taxation year, means the lesser of the positive or negative amount of the reinsurance contract held asset for the group

• (a) that would be reported as at the end of the taxation year if the amount were determined without reference to amounts described in subparagraphs (a)(i) to (iii) of the definition liability for remaining coverage in this subsection, and

• (b) that would be determined at the end of the taxation year in accordance with International Financial Reporting Standards using reasonable assumptions in the circumstances if the amount were determined without reference to amounts described in subparagraphs (a)(i) to (iii) of the definition liability for remaining coverage in this subsection; (montant au titre des contrats de réassurance détenus)

relevant authority

relevant authority of an insurer means

• (a) the Superintendent of Financial Institutions, if the insurer is required by law to report to the Superintendent of Financial Institutions, and

• (b) in any other case, the Superintendent of Insurance or other similar officer or authority of the province under whose laws the insurer is incorporated; (autorité compétente)

• Marginal note:Assets and liabilities

  (12.1) For greater certainty, in determining the amount of

  • (a) the contractual service margin, liability for incurred claims and liability for remaining coverage for a group of insurance contracts of an insurer, the amount is

    • (i) a positive amount if the amount is reported as a liability, and

    • (ii) a negative amount if the amount is reported as an asset; and

  • (b) the contractual service margin and reinsurance contract held amount for a group of reinsurance contracts held by an insurer, the amount is

    • (i) a positive amount if the amount is reported as an asset, and

    • (ii) a negative amount if the amount is reported as a liability.

• Marginal note:IFRS reference

  (12.2) Except as otherwise provided, references to International Financial Reporting Standards in this section refer to the International Financial Reporting Standards adopted by the Accounting Standards Board and effective for years that begin on or after January 1, 2023.

• Marginal note:Amount reported

  (12.3) A reference in subsections (12) and 138.1(1) of this Act and Parts XIV, XXIV and LXXXVI of the Income Tax Regulations to an amount that is reported, or that would be reported, of an insurer as at the end of a taxation year means

  • (a) if the insurer is the Canada Mortgage and Housing Corporation or a foreign affiliate of a taxpayer resident in Canada, an amount that is reported, or that would be reported, in the insurer’s financial statements for the year if those statements were prepared in accordance with International Financial Reporting Standards;

  • (b) if paragraph (a) does not apply and reporting by the insurer to the insurer’s relevant authority is required at the end of the year, an amount that is reported, or that would be reported, in the insurer’s non-consolidated balance sheet for the year accepted by the insurer’s relevant authority;

  • (c) if paragraphs (a) and (b) do not apply and the insurer is, throughout the year, subject to the supervision of its relevant authority, an amount that is reported, or that would be reported, in a non-consolidated balance sheet for the year that is prepared in a manner consistent with the requirements that would have applied had reporting to the insurer’s relevant authority been required at the end of the year; and

  • (d) in any other case, nil.

• Marginal note:Transition year income inclusion

  (16) There shall be included in computing an insurer’s income for its transition year from an insurance business carried on by it in the transition year the positive amount, if any, of the insurer’s reserve transition amount in respect of that insurance business.

• Marginal note:Transition year income deduction

  (17) There shall be deducted in computing an insurer’s income for its transition year from an insurance business carried on by it in the transition year the absolute value of the negative amount, if any, of the insurer’s reserve transition amount in respect of that insurance business.

• Marginal note:IFRS transition — reversals

  (17.1) In applying subsections (18) and (19) to an insurer for a taxation year of the insurer in respect of International Financial Reporting Standards,

  • (a) the reference to “policy reserve” in the description of C in the definition reserve transition amount in subsection (12) is to be read as a reference to “policy reserve determined without reference to the insurer’s excluded policies”;

  • (b) the description of D in the definition reserve transition amount in subsection (12) is to be read as follows:

    D

    is the amount determined by the formula

    D.1 − D.2

    where

    D.1

    is the maximum amount that the insurer is permitted to claim under paragraph 20(7)(c) as a policy reserve determined without reference to the insurer’s excluded policies, and

    D.2

    is the amount of policy acquisition costs of the insurer that is not deductible, but in the absence of subsection 18(9.02) (as it read in the base year) would have been deductible, in the base year or a preceding taxation year;

  • (c) the reference to “life insurance policies” in the description of G in the definition reserve transition amount in subsection (12) is to be read as a reference to “life insurance policies other than excluded policies”; and

  • (d) the amount included in the description of H in the definition reserve transition amount in subsection (12) is to be determined without reference to excluded policies.

• Marginal note:Transition year income inclusion reversal

  (18) If an amount has been included under subsection (16) in computing an insurer’s income for its transition year from an insurance business carried on by it, there shall be deducted in computing the insurer’s income, for each particular taxation year of the insurer that ends after the beginning of the transition year, from that insurance business, the amount determined by the formula

A

is the amount included under subsection (16) in computing the insurer’s income for the transition year from that insurance business; and

• Marginal note:Transition year income deduction reversal

  (19) If an amount has been deducted under subsection (17) in computing an insurer’s income for its transition year from an insurance business carried on by it, there shall be included in computing the insurer’s income, for each particular taxation year of the insurer that ends after the beginning of the transition year, from that insurance business, the amount determined by the formula

A

is the amount deducted under subsection (17) in computing the insurer’s income for the transition year from that insurance business; and

• Marginal note:Winding-up

  (20) If an insurer has, in a winding-up to which subsection 88(1) has applied, been wound-up into another corporation (referred to in this subsection as the “parent”), and immediately after the winding-up the parent carries on an insurance business, in applying subsections (18) and (19) in computing the income of the insurer and of the parent for particular taxation years that end on or after the first day (referred to in this subsection as the “start day”) on which assets of the insurer were distributed to the parent on the winding-up,

  • (a) the parent is, on and after the start day, deemed to be the same corporation as and a continuation of the insurer in respect of

    • (i) any amount included under subsection (16) or deducted under subsection (17) in computing the insurer’s income from an insurance business for its transition year,

    • (ii) any amount deducted under subsection (18) or included under subsection (19) in computing the insurer’s income from an insurance business for a taxation year of the insurer that begins before the start day, and

    • (iii) any amount that would — in the absence of this subsection and if the insurer existed and carried on an insurance business on each day that is the start day or a subsequent day and on which the parent carries on an insurance business — be required to be deducted or included, in respect of any of those days, under subsection (18) or (19) in computing the insurer’s income from an insurance business; and

  • (b) the insurer is, in respect of each of its particular taxation years, to determine the value for B in the formulas in subsections (18) and (19) without reference to the start day and days after the start day.

• Marginal note:Amalgamations

  (21) If there is an amalgamation (within the meaning assigned by subsection 87(1)) of an insurer with one or more other corporations to form one corporation (referred to in this subsection as the “new corporation”), and immediately after the amalgamation the new corporation carries on an insurance business, in applying subsections (18) and (19) in computing the income of the new corporation for particular taxation years of the new corporation that begin on or after the day on which the amalgamation occurred, the new corporation is, on and after that day, deemed to be the same corporation as and a continuation of the insurer in respect of

  • (a) any amount included under subsection (16) or deducted under subsection (17) in computing the insurer’s income from an insurance business for its transition year;

  • (b) any amount deducted under subsection (18) or included under subsection (19) in computing the insurer’s income from an insurance business for a taxation year that begins before the day on which the amalgamation occurred; and

  • (c) any amount that would — in the absence of this subsection and if the insurer existed and carried on an insurance business on each day that is the day on which the amalgamation occurred or a subsequent day and on which the new corporation carries on an insurance business — be required to be deducted or included, in respect of any of those days, under subsection (18) or (19) in computing the insurer’s income from an insurance business.

• Marginal note:Application of subsection (23)

  (22) Subsection (23) applies if, at any time, an insurer (referred to in this subsection and subsection (23) as the “transferor”) transfers, to a corporation (referred to in this subsection and subsection (23) as the “transferee”) that is related to the transferor, property in respect of an insurance business carried on by the transferor (referred to in this subsection and subsection (23) as the “transferred business”) and

• (b) subsection 85(1) applies to the transfer, the transfer includes all or substantially all of the property and liabilities of the transferred business and, immediately after the transfer, the transferee carries on an insurance business.

• (iii) any amount that would — in the absence of this subsection and if the transferor existed and carried on an insurance business on each day that includes that time or is a subsequent day and on which the transferee carries on an insurance business — be required to be deducted or included, in respect of any of those days, under subsection (18) or (19) in computing the transferor’s income that can reasonably be attributed to the transferred business; and

• Marginal note:Ceasing to carry on business

  (24) If at any time an insurer ceases to carry on all or substantially all of an insurance business (referred to in this subsection as the “discontinued business”), and none of subsections (20) to (22) apply,

  • (a) there shall be deducted, in computing the insurer’s income from the discontinued business for the insurer’s taxation year that includes the time that is immediately before that time, the amount determined by the formula

    A − B

    where

    A

    is the amount included under subsection (16) in computing the insurer’s income from the discontinued business for its transition year, and

    B

    is the total of all amounts each of which is an amount deducted under subsection (18) in computing the insurer’s income from the discontinued business for a taxation year that began before that time; and

  • (b) there shall be included, in computing the insurer’s income from the discontinued business for the insurer’s taxation year that includes the time that is immediately before that time, the amount determined by the formula

    C − D

    where

    C

    is the amount deducted under subsection (17) in computing the insurer’s income from the discontinued business for its transition year, and

    D

    is the total of all amounts each of which is an amount included under subsection (19) in computing the insurer’s income from the discontinued business for a taxation year that began before that time.

• Marginal note:Ceasing to exist

  (25) If at any time an insurer that carried on an insurance business ceases to exist (otherwise than as a result of a winding-up or amalgamation described in subsection (20) or (21)), for the purposes of subsection (24), the insurer is deemed to have ceased to carry on the insurance business at the earlier of

  • (a) the time (determined without reference to this subsection) at which the insurer ceased to carry on the insurance business, and

  • (b) the time that is immediately before the end of the last taxation year of the insurer that ended at or before the time at which the insurer ceased to exist.