I-3, r. 1 - Regulation respecting the Taxation Act

Section 152r5 Disposition versions

2023-09-26

152R5. For the purposes of paragraph a of sections 87R1 and 152R3, the amount to be determined under this section in respect of an insurer for a taxation year is the amount, greater or less than nil, determined by the formula

A + B + (0.95 × C) – (0.9 × D) + E + F + G – [H – (0.9 × I)]

In the formula in the first paragraph,

(a)  A is the total of all amounts each of which is the liability for remaining coverage for a group of insurance contracts of the insurer at the end of the year other than a group of life insurance contracts;

(b)  B is the total of all amounts each of which is an amount, in respect of a group of insurance contracts of the insurer at the end of the year other than a group of life insurance contracts, that is

i.  the liability for incurred claims for the group, if no portion of the liability for incurred claims is in respect of insurance policies other than insurance policies in respect of which

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

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

(3)  the insurer has agreed to a structured settlement of the claim, or

ii.  in any other case, the amount that would be the liability for incurred claims for the group if the liability for incurred claims were determined without taking into account insurance policies other than insurance policies that meet the conditions in subparagraphs 1 to 3 of subparagraph i;

(c)  C is the total of all amounts each of which is an amount, in respect of a group of insurance contracts of the insurer at the end of the year other than a group of life insurance contracts, that is

i.  the liability for incurred claims for the group, if no portion of the liability for incurred claims is in respect of insurance policies that meet the conditions in subparagraphs 1 to 3 of subparagraph i of subparagraph b, or

ii.  in any other case, the amount that would be the liability for incurred claims for the group if the liability for incurred claims were determined without taking into account insurance policies that meet the conditions in subparagraphs 1 to 3 of subparagraph i of subparagraph b;

(d)  D is the total of all amounts each of which is the contractual service margin for a group of insurance contracts of the insurer at the end of the year that is in respect of

i.  non-cancellable or guaranteed renewable accident and sickness policies that are in respect of accident and sickness insurance,

ii.  mortgage or hypothecary insurance, or

iii.  title insurance;

(e)  E is an amount in respect of policies that insure a nuclear risk, a fidelity risk, a surety risk, or a risk related to a financial loss of a lender on a loan made on the security of an immovable property, equal to 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 computing any of the amounts determined under subparagraphs a to d and f, and

ii.  a reasonable amount as a reserve determined at the end of the year in respect of such risks, other than an amount included in computing any of the amounts determined under subparagraphs a to d and f;

(f)  F is the amount of a guarantee fund at the end of the year provided for under an agreement in writing entered into between the insurer and His Majesty in right of Canada under which His 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 an immovable property;

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

i.  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 computing any of the amounts determined under subparagraphs a to f, and

ii.  a reasonable amount as a reserve determined at the end of the year in respect of those risks, other than an amount included in computing any of the amounts determined under subparagraphs a to f;

(h)  H is the total of all amounts each of which is an amount, in respect of a group of reinsurance contracts held by the insurer at the end of the year, that is

i.  if no portion of the reinsurance contract held amount for the group is in respect of the reinsurance of a risk under life insurance policies, the reinsurance contract held amount for the group, or

ii.  in any other case, the amount that would be the reinsurance contract held amount for the group if the amount were determined without taking into account any portion of that amount that is in respect of the reinsurance of a risk under life insurance policies; and

(i)  I is the total of all amounts each of which is an amount, in respect of a group of reinsurance contracts held by the insurer at the end of the year, that is

i.  if no portion of the contractual service margin for the group is in respect of the reinsurance of a risk under a policy other than a policy referred to in subparagraph i of subparagraph d, or a policy in respect of insurance referred to in subparagraph ii or iii of subparagraph d, the contractual service margin for the group, or

ii.  in any other case, the amount that would be the contractual service margin for the group if the contractual service margin were determined without taking into account any portion of the contractual service margin other than that portion that is in respect of the reinsurance of a risk under a policy referred to in subparagraph i of subparagraph d, and a policy in respect of insurance referred to in subparagraph ii or iii of subparagraph d;

(j)  (subparagraph revoked);

(k)  (subparagraph revoked);

(l)  (subparagraph revoked).

s. 152R12; O.C. 1463-2001, s. 50; O.C. 1155-2004, s. 18; O.C. 134-2009, s. 1; S.Q. 2023, c. 19, s. 147.

2012-09-01

152R5. For the purposes of paragraph a of sections 87R1 and 152R3, the amount to be determined under this section in respect of an insurer for a taxation year is the amount, greater or less than nil, determined by the formula

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

In the formula in the first paragraph,

(a)  A is the total of all amounts each of which is, in respect of a policy other than a policy that insures a risk in respect of one of the following items, the unearned portion at the end of the year of the premium paid by the policyholder in respect of the policy, determined by apportioning the net premium equally over the period to which that premium relates:

i.  a financial loss of a lender on a loan made on the security of an immovable property,

ii.  a home warranty,

iii.  a lease guarantee, or

iv.  an extended motor vehicle warranty;

(b)  B is the total of all amounts each of which is an amount determined in respect of a policy that insures a risk in respect of any of the items referred to in subparagraphs i to iv of subparagraph a equal to the lesser of

i.  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 in respect of the policy, and

ii.  a reasonable amount as a reserve determined 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 in respect of the policy;

(c)  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)  D is the amount, in respect of policies, other than policies in respect of which an amount can be determined under subparagraph e, under which a claim that was incurred before the end of the year has been made 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 there may be a claim incurred before the end of the year that has not been made to the insurer before that time, equal to 95% of the lesser of

i.  the total of the reported reserves of the insurer at the end of the year in respect of such claims or possible claims, and

ii.  the total of the claim liabilities of the insurer at the end of the year in respect of such claims or possible claims;

(e)  E is the amount in respect of policies under which a claim that was incurred before the end of the year has been made to the insurer before the end of the year and the claim is in respect of damages for personal injury or death and the insurer has agreed to a structured settlement of the claim, equal to the lesser of

i.  the total of the reported reserves of the insurer at the end of the year in respect of such claims, and

ii.  the total of the claim liabilities of the insurer at the end of the year in respect of such claims;

(f)  F is an additional amount, in respect of policies that insure a nuclear risk, a fidelity risk, a surety risk or a risk related to a financial loss of a lender on a loan made on the security of an immovable property, equal to 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 computing any of the amounts determined under subparagraphs a to e and g to l, and

ii.  a reasonable amount as a reserve determined at the end of the year in respect of such risks, other than an amount included in computing any of the amounts determined under subparagraphs a to e and g to l;

(g)  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 an immovable property;

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

i.  where the amounts determined under each of subparagraphs 1 and 2 are greater than nil, the lesser of

(1)  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 computing any of the amounts determined under subparagraphs a to g and i to l, and

(2)  a reasonable amount as a reserve determined at the end of the year in respect of such risks, other than an amount included in computing any of the amounts determined under subparagraphs a to g and i to l, and

ii.  in any other case, nil;

(i)  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

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 computing any of the amounts determined under subparagraphs a to h and j to l, and

ii.  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 computing any of the amounts determined under subparagraphs a to h and j to l;

(j)  J is the total of all amounts each of which

i.  is not an amount deductible under section 832 of the Act,

ii.  is the amount, 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 used by the insurer to reduce or eliminate a future adverse claims experience under the policy, paid or unconditionally credited to the policyholder by the insurer or applied in discharge, in whole or in part, of a liability of the policyholder to pay premiums to the insurer under the policy, and

iii.  is equal to the least of

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

(2)  25% of the amount of the premium payable under the terms of the policy for the 12-month period ending, if the policy is terminated in the year, on the date the policy is terminated, or in any other case, at the end of the year, and

(3)  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;

(k)  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 b of section 152R2 or 840R6, 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)  L is an amount in respect of policies that insure earthquake risks in Canada equal to the lesser of

i.  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 computing any of the amounts determined under subparagraphs a to k, and

ii.  a reasonable amount as a reserve determined at the end of the year in respect of those risks, other than an amount included in computing any of the amounts determined under subparagraphs a to k.

s. 152R12; O.C. 1463-2001, s. 50; O.C. 1155-2004, s. 18; O.C. 134-2009, s. 1.