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I-3, r. 1 - Regulation respecting the Taxation Act
Section 976.1r1
Disposition versions
976.1R1. For the purposes of paragraph e of section 976.1 of the Act, the net cost of pure insurance for a year in respect of a taxpayer’s interest in a life insurance policy means
(a) if the policy is issued before 1 January 2017, the time of its issue being determined at the end of the year, the amount determined by the formula
A × (B – C); or
(b) if the policy is issued after 31 December 2016, the time of its issue being determined at the end of the year, the aggregate of all amounts each of which is an amount determined in respect of a coverage in respect of the interest by the formula
D × (E − F).
In the formulas in the first paragraph,
(a) A is the probability, computed on the basis of the rates of mortality under the 1969‑1975 mortality tables published in Volume XVI of the Proceedings of the Canadian Institute of Actuaries, or on the basis described in section 976.1R1.1, that an individual who has the same characteristics as the individual whose life is insured will die in the year;
(b) B is the death benefit in respect of the interest at the end of the year;
(c) C is, depending on the method regularly followed by the life insurer in computing the net cost of pure insurance, either the accumulating fund in respect of the interest at the end of the year, determined without reference to an outstanding policy loan, or the interest’s cash surrender value at the end of the year;
(d) D is the probability, computed on the basis of the rates of mortality determined under subparagraph b of the first paragraph of section 92.11R12.1, or on the basis described in section 976.1R1.2, that an individual whose life is insured under the coverage will die in the year;
(e) E is the death benefit under the coverage in respect of the interest at the end of the year; and
(f) F is the aggregate of
i. the portion, in respect of the coverage in respect of the interest, of the amount that would be the present value, determined for the purposes of Division II of Chapter IV of Title XI, on the last policy anniversary that is on or before the last day of the year, of the fund value of the coverage if the fund value of the coverage were equal to the fund value of the coverage at the end of the year, and
ii. the portion, in respect of the coverage in respect of the interest, of the amount that would be determined on that policy anniversary under subparagraph c of the fourth paragraph of section 92.11R1.1 in respect of the coverage, if the death benefit under the coverage, and the fund value of the coverage, on that policy anniversary were equal to the death benefit under the coverage and the fund value of the coverage, respectively, at the end of the year.
976.1R1. For the purposes of paragraph e of section 976.1 of the Act, the net cost of pure insurance for a year in respect of a taxpayer’s interest in a life insurance policy means
(a) if the policy is issued before 1 January 2017, the time of its issue being determined at the end of the year, the amount determined by the formula
A × (B – C); or
(b) if the policy is issued after 31 December 2016, the time of its issue being determined at the end of the year, the aggregate of all amounts each of which is an amount determined in respect of a coverage in respect of the interest by the formula
D × (E − F).
In the formulas in the first paragraph,
(a) A is the probability, computed on the basis of the rates of mortality under the 1969‑1975 mortality tables published in Volume XVI of the Proceedings of the Canadian Institute of Actuaries, or on the basis described in section 976.1R1.1, that an individual who has the same characteristics as the individual whose life is insured will die in the year;
(b) B is the death benefit in respect of the interest at the end of the year;
(c) C is, depending on the method regularly followed by the life insurer in computing the net cost of pure insurance, either the accumulating fund in respect of the interest at the end of the year, determined without reference to an outstanding policy loan, or the interest’s cash surrender value at the end of the year;
(d) D is the probability, computed on the basis of the rates of mortality determined under subparagraph b of the first paragraph of section 92.11R12.1, or on the basis described in section 976.1R1.2, that an individual whose life is insured under the coverage will die in the year;
(e) E is the death benefit under the coverage in respect of the interest at the end of the year; and
(f) F is the aggregate of
i. the portion, in respect of the coverage in respect of the interest, of the amount that would be the present value, determined for the purposes of Division II of Chapter IV of Title XI, on the last policy anniversary that is on or before the last day of the year, of the fund value of the coverage if the fund value of the coverage were equal to the fund value of the coverage at the end of the year, and
ii. the portion, in respect of the coverage in respect of the interest, of the amount that would be determined on that policy anniversary under subparagraph f of the fourth paragraph of section 92.11R1.1 in respect of the coverage, if the death benefit under the coverage, and the fund value of the coverage, on that policy anniversary were equal to the death benefit under the coverage and the fund value of the coverage, respectively, at the end of the year.
976.1R1. For the purposes of paragraph e of section 976.1 of the Act, the net cost of pure insurance for a year in respect of a taxpayer’s interest in a life insurance policy means the result obtained when the probability, computed on the basis of the rates of mortality under the 1969-1975 mortality tables published in volume XVI of the Proceedings of the Canadian Institute of Actuaries or on the basis of the second paragraph, that a person having the same characteristics as the person whose life is insured will die in the year is multiplied by the amount by which the death benefit in respect of the taxpayer’s interest at the end of the year exceeds, depending upon the method regularly used by the life insurer in computing the net cost of pure insurance, either the accumulating fund in respect of the taxpayer’s interest in the policy at the end of the year, determined without reference to any outstanding policy loan, or the cash surrender value of that interest at the end of the year.
Where premiums for a particular class of life insurance policy offered by a life insurer are not established directly on the basis of the insured’s sex or the fact that the insured is a smoker or non-smoker, the probability described in the first paragraph may be determined on the basis of rates of mortality established otherwise, provided that for each age for such class of life insurance policy, the expected value of the total net cost of pure insurance, calculated on the basis of such rates of mortality, is equal to the expected value of the total net cost of pure insurance computed on the basis of the rates of mortality under the 1969-1975 mortality tables published in volume XVI of the Proceedings of the Canadian Institute of Actuaries.
