8101 (1) In this section, transition deduction of an insurer means the amount deducted under subsection 20(26) of the Act in computing the insurer’s income for its taxation year that includes February 23, 1994.
(2) Subject to subsection (3), there is prescribed for the purpose of section 12.3 of the Act in respect of an insurer for a taxation year that ends after February 22, 1994 the amount determined by the formula
[(0.05A + 0.10B + 0.15C) / 365] x D
where
- A
- is the total of
(a) the number of days in the taxation year that are in 1994 or 1995, and
(b) where the taxation year includes February 23, 1994, the number of days in 1994 that are before the first day of the taxation year,
- B
- is the number of days in the taxation year (other than February 29) that are in any of 1996 to 2001,
- C
- is the number of days in the taxation year that are in 2002 or 2003, and
- D
- is the insurer’s transition deduction minus the amount, if any, required by subsection (4) or paragraph (5)(b) to be subtracted.
(3) Where subsection 88(1) of the Act has applied to the winding-up of an insurer (in this subsection referred to as the “subsidiary”),
(a) the values of A, B and C in subsection (2) shall be determined in respect of the subsidiary without including any days that are after the day on which the subsidiary’s assets were distributed to its parent on the winding-up; and
(b) there is prescribed for the purpose of section 12.3 of the Act in respect of the parent for its taxation year that includes the day referred to in paragraph (a) the total of
(i) the amount that would be determined under subsection (2) in respect of the parent for the year if the parent’s transition deduction did not include the subsidiary’s transition deduction, and
(ii) the amount that would be determined under subsection (2) in respect of the parent for the year if
(A) the values of A, B and C in that subsection were determined without including the day referred to in paragraph (a) and any days before that day, and
(B) the value of D in that subsection were equal to the subsidiary’s transition deduction.
(4) Where subsection 138(11.5) or (11.94) of the Act has applied to the transfer of an insurance business by an insurer, there shall be subtracted, in determining the value of D in subsection (2) in respect of the insurer for a taxation year ending after the insurer ceased to carry on all or substantially all of the business, the part of the insurer’s transition deduction that can reasonably be attributed to the business.
(5) Where an insurer ceases to carry on all or substantially all of an insurance business, otherwise than as a result of a merger to which subsection 87(2) of the Act applies, a winding-up to which subsection 88(1) of the Act applies or a transfer of the business to which subsection 138(11.5) or (11.94) of the Act applies,
(a) there is prescribed for the purpose of section 12.3 of the Act in respect of the insurer for its taxation year in which the cessation of business occurs, in addition to the amount prescribed by subsection (2), the amount, if any, by which
(i) the part of the insurer’s transition deduction that can reasonably be attributed to the business
exceeds
(ii) that part of the total of the amounts included under section 12.3 of the Act in computing the income of the insurer for preceding taxation years that can reasonably be considered to be in respect of the amount determined under subparagraph (i); and
(b) there shall be subtracted, in determining the value of D in subsection (2) in respect of the insurer for the year or a subsequent taxation year, the amount determined under subparagraph (a)(i).
- [NOTE: Application provisions are not included in the consolidated text
- see relevant amending Acts and regulations.]
- SOR/91-78, s. 4
- SOR/94-686, s. 78(F)
- SOR/96-443, s. 3
- Date modified: