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

PART XIIIElections in Respect of Taxpayers Ceasing To Be Resident in Canada

Elections To Defer Capital Gains

• 1300 (1) Any election by an individual under paragraph 48(1)(c) of the Act shall be made by filing with the Minister the prescribed form on or before the day on or before which the return of income for the year in which the taxpayer ceased to be resident in Canada is required to be filed under section 150 of the Act.

• (2) Any election by a Canadian corporation under paragraph 48(1)(c) of the Act shall be made by filing with the Minister, on or before the day on or before which the return of income for the year in which the corporation ceased to be resident in Canada is required to be filed under section 150 of the Act, the following documents in duplicate:

  • (a) the form prescribed by the Minister;

  • (b) where the directors of the corporation are legally entitled to administer the affairs of the corporation, a certified copy of their resolution authorizing the election to be made; and

  • (c) where the directors of the corporation are not legally entitled to administer the affairs of the corporation, a certified copy of the authorization of the making of the election by the person or persons legally entitled to administer the affairs of the corporation.

Elections To Defer Payment of Taxes

• 1301 (1) Any election by an individual under subsection 159(4) of the Act shall be made by filing with the Minister the prescribed form on or before the day on or before which the return of income for the year in which the taxpayer ceased to be resident in Canada is required to be filed under section 150 of the Act.

• (2) Any election by a Canadian corporation under subsection 159(4) of the Act shall be made by filing with the Minister, on or before the day on or before which the return of income for the year in which the corporation ceased to be resident in Canada is required to be filed under section 150 of the Act, the following documents in duplicate:

  • (a) the form prescribed by the Minister;

  • (b) where the directors of the corporation are legally entitled to administer the affairs of the corporation, a certified copy of their resolution authorizing the election to be made; and

  • (c) where the directors of the corporation are not legally entitled to administer the affairs of the corporation, a certified copy of the authorization of the making of the election by the person or persons legally entitled to administer the affairs of the corporation.

Elections To Realize Capital Gains

1302 Any election by an individual under paragraph 48(1)(a) of the Act shall be made by filing with the Minister the prescribed form on or before the day on or before which the return of income for the year in which the taxpayer ceased to be resident in Canada is required to be filed under section 150 of the Act.

PART XIVInsurance Business Policy Reserves

DIVISION 1Policy Reserves

Non-Life Insurance Business

• 1400 (1) For the purpose of paragraph 20(7)(c) of the Act, the amount prescribed in respect of an insurer for a taxation year is

  • (a) the amount determined under subsection (3) in respect of the insurer for the year, where that amount is greater than nil, and

  • (b) nil, in any other case.

• (2) For the purpose of paragraph 12(1)(e.1) of the Act, the amount prescribed in respect of an insurer for a taxation year is

  • (a) the absolute value of the amount determined under subsection (3) in respect of the insurer for the year, where that amount is less than nil, and

  • (b) nil, in any other case.

• (3) For the purposes of paragraphs (1)(a) and (2)(a), the amount determined under this subsection in respect of an insurer for a taxation year is the amount, which may be positive or negative, determined by the formula

  A + B + C + D + E + F + G + H + I + J + K + L

  where

  A

  is the total of all amounts each of which is the unearned portion at the end of the year of the premium paid by the policyholder for a policy (other than a policy that insures a risk in respect of

  • (a) a financial loss of a lender on a loan made on the security of real property,

  • (b) a home warranty,

  • (c) a lease guarantee, or

  • (d) an extended motor vehicle warranty),

  which is determined by apportioning the premium paid by the policyholder equally over the period to which that premium relates;

  B

  is the total of all amounts each of which is an amount determined in respect of a policy referred to in paragraph (a), (b), (c) or (d) of the description of A equal to the lesser of

  • (a) the amount of the reported reserve of the insurer at the end of the year in respect of the unearned portion at the end of the year of the premium paid by the policyholder for the policy, and

  • (b) a reasonable amount as a reserve determined as at the end of the year in respect of the unearned portion at the end of the year of the premium paid by the policyholder for the policy;

  C

  is the total of all amounts each of which is the amount in respect of a policy, where all or a portion of a risk under the policy was reinsured, equal to the unearned portion at the end of the year of a reinsurance commission in respect of the policy determined by apportioning the reinsurance commission equally over the period to which it relates;

  D

  is the amount, in respect of policies (other than policies in respect of which an amount can be determined under the description of E) under which

  • (a) a claim that was incurred before the end of the year has been reported to the insurer before the end of the year and in respect of which the insurer is, or may be, required to make a payment or incur an expense after the year, or

  • (b) there may be a claim incurred before the end of the year that has not been reported to the insurer before the end of the year,

  equal to 95% of the lesser of

  • (c) the total of the reported reserves of the insurer at the end of the year in respect of such claims or possible claims, and

  • (d) the total of the claim liabilities of the insurer at the end of the year in respect of such claims or possible claims;

  E

  is the amount in respect of policies under which

  • (a) a claim that was incurred before the end of the year has been reported to the insurer before the end of the year,

  • (b) the claim is in respect of damages for personal injury or death, and

  • (c) the insurer has agreed to a structured settlement of the claim,

  equal to the lesser of

  • (d) the total of the reported reserves of the insurer at the end of the year in respect of such claims, and

  • (e) the total of the claim liabilities of the insurer at the end of the year in respect of such claims;

  F

  is an additional amount, in respect of policies that insure a fidelity risk, a surety risk, a nuclear risk or a risk related to a financial loss of a lender on a loan made on the security of real property, equal to the lesser of

  • (a) the total of the reported reserves of the insurer at the end of the year in respect of such risks (other than an amount included in determining the value of A, B, C, D, E, G, H, I, J, K or L), and

  • (b) a reasonable amount as a reserve determined as at the end of the year in respect of such risks (other than an amount included in determining the value of A, B, C, D, E, G, H, I, J, K or L);

  G

  is the amount of a guarantee fund at the end of the year provided for under an agreement in writing between the insurer and Her Majesty in right of Canada under which Her Majesty has agreed to guarantee the obligations of the insurer under a policy that insures a risk related to a financial loss of a lender on a loan made on the security of real property;

  H

  is the amount in respect of risks under pre-1996 non-cancellable or guaranteed renewable accident and sickness policies equal to

  • (a) where the amounts determined under each of subparagraphs (i) and (ii) are greater than nil, the lesser of

    • (i) the total of the reported reserves of the insurer at the end of the year in respect of such risks (other than an amount included in determining the value of A, B, C, D, E, F, G, I, J, K or L), and

    • (ii) a reasonable amount as a reserve determined as at the end of the year in respect of such risks (other than an amount included in determining the value of A, B, C, D, E, F, G, I, J, K or L), and

  • (b) nil, in any other case;

  I

  is the amount in respect of risks under post-1995 non-cancellable or guaranteed renewable accident and sickness policies equal to the lesser of

  • (a) the total of the reported reserves of the insurer at the end of the year in respect of such risks (other than an amount included in determining the value of A, B, C, D, E, F, G, H, J, K or L), and

  • (b) the total of the policy liabilities of the insurer at the end of the year in respect of such risks (other than an amount included in determining the value of A, B, C, D, E, F, G, H, J, K or L);

  J

  is the total of all amounts (other than an amount deductible under subsection 140(1) of the Act) each of which is the amount, which is the least of P, Q and R, in respect of a dividend, refund of premiums or refund of premium deposits provided for under the terms of a group accident and sickness insurance policy that will be

  • (a) used by the insurer to reduce or eliminate a future adverse claims experience under the policy,

  • (b) paid or unconditionally credited to the policyholder by the insurer, or

  • (c) applied in discharge, in whole or in part, of a liability of the policyholder to pay premiums to the insurer under the policy,

    where

    P

    is a reasonable amount as a reserve determined as at the end of the year in respect of the dividend, refund of premiums or refund of premium deposits,

    Q

    is 25% of the amount of the premium payable under the terms of the policy for the 12-month period ending

    • (i) if the policy is terminated in the year, on the day the policy is terminated, and

    • (ii) in any other case, at the end of the year, and

    R

    is the reported reserve of the insurer at the end of the year in respect of the dividend, refund of premiums or refund of premium deposits; and

  K

  is the total of all amounts each of which is the amount, in respect of a policy under which a portion of the particular amount paid or payable by the policyholder for the policy before the end of the year is deducted under paragraph 1408(4)(b), equal to the portion of that particular amount that the insurer has determined will, after the end of the year, be returned to or credited to the account of the policyholder on the termination of the policy; and

  L

  is an amount in respect of policies that insure earthquake risks in Canada equal to the lesser of

  • (a) the portion of the reported reserve of the insurer at the end of the year in respect of those risks that is attributable to accumulations from premiums in respect of those risks (other than an amount included in determining the value of A, B, C, D, E, F, G, H, I, J or K), and

  • (b) a reasonable amount as a reserve determined as at the end of the year in respect of those risks (other than an amount included in determining the value of A, B, C, D, E, F, G, H, I, J or K).

• (4) Where the relevant authority does not require an insurer (other than an insurer that is required by law to report to the Superintendent of Financial Institutions) to determine its liabilities in respect of claims referred to in the description of D or E in subsection (3) in accordance with actuarial principles,

  • (a) the value of D is deemed to be 95% of the amount determined under paragraph (c) of the description of D; and

  • (b) the value of E is deemed to be the amount determined under paragraph (d) of the description of E.

• (5) [Repealed, SOR/2002-123, s. 4]