Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Marginal note:Amount to be included

• 12.2 (1) Where in a taxation year a taxpayer holds an interest, last acquired after 1989, in a life insurance policy that is not

  • (a) an exempt policy,

  • (b) a prescribed annuity contract, and

  • (c) a contract under which the policyholder has, under the terms and conditions of a life insurance policy that was not an annuity contract and that was last acquired before December 2, 1982, received the proceeds therefrom in the form of an annuity contract,

  on any anniversary day of the policy, there shall be included in computing the taxpayer’s income for the taxation year the amount, if any, by which the accumulating fund on that day in respect of the interest in the policy, as determined in prescribed manner, exceeds the adjusted cost basis to the taxpayer of the interest in the policy on that day.

• (3) [Repealed, 1994, c. 7, Sch. II, s. 8(2)]

• Marginal note:Idem

  (5) Where in a taxation year subsection 12.2(1) applies with respect to a taxpayer’s interest in an annuity contract (or would apply if the contract had an anniversary day in the year at a time when the taxpayer held the interest), there shall be included in computing the taxpayer’s income for the year the amount, if any, by which

  • (a) the total of all amounts each of which is an amount determined at the end of the year, in respect of the interest, for any of H to L in the definition adjusted cost basis in subsection 148(9)

  exceeds

  • (b) the total of all amounts each of which is an amount determined at the end of the year, in respect of the interest, for any of A to G in the definition referred to in paragraph 12.2(5)(a).

• Marginal note:Deemed acquisition of interest in annuity

  (8) For the purposes of this section, the first premium that was not fixed before 1990 and that was paid after 1989 by or on behalf of a taxpayer under an annuity contract, other than a contract described in paragraph (1)(d) of this section, or paragraph 12.2(3)(e) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, or to which subsection (1) of this section or subsection 12.2(4) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, applies (as those paragraphs and subsections, the numbers of which are those in force immediately before December 17, 1991, read in their application to life insurance policies last acquired before 1990) or to which subsection 12(3) applies, last acquired by the taxpayer before 1990 (in this subsection referred to as the “original contract”) shall be deemed to have been paid to acquire, at the time the premium was paid, an interest in a separate annuity contract issued at that time, to the extent that the amount of the premium was not fixed before 1990, and each subsequent premium paid under the original contract shall be deemed to have been paid under that separate contract to the extent that the amount of that subsequent premium was not fixed before 1990.

• Marginal note:Riders

  (10) For the purposes of this Act, a rider added at any time after 1989 to a life insurance policy last acquired before 1990 that provides additional life insurance is deemed to be a separate life insurance policy issued at that time unless

  • (a) the policy is an exempt policy last acquired after December 1, 1982 or an annuity contract; or

  • (b) the only additional life insurance provided by the rider is an accidental death benefit.

• Marginal note:Definitions

  (11) In this section and paragraph 56(1)(d.1) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952,

  anniversary day

  anniversary day of a life insurance policy means

  • (a) the day that is one year after the day immediately preceding the day on which the policy was issued, and

  • (b) each day that occurs at each successive one-year interval after the day determined under paragraph (a). (jour anniversaire)

  exempt policy

  exempt policy has the meaning prescribed by regulation. (police exonérée)

• Marginal note:Application of ss. 138(12) and 148(9)

  (12) The definitions in subsections 138(12) and 148(9) apply to this section.

• Marginal note:Application of s. 148(10)

  (13) Subsection 148(10) applies to this section.