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

Section 92.11r12.2 Disposition versions

2019-06-19

92.11R12.2. For the purpose of applying this division at a particular time, the amounts determined under this section are,

(a)  in respect of a deposit administration fund policy, the total of the insurer’s liabilities under the policy calculated in the manner that

i.  if the insurer is required to file an annual report with the relevant authority for a period that includes the particular time, is required to be used in preparing that report, and

ii.  in any other case, is required to be used in preparing its annual financial statements for the period that includes the particular time;

(b)  in respect of a group term life insurance policy that provides insurance for a period not exceeding 12 months, the unearned portion of the premium paid by the policyholder in respect of the policy at the particular time determined by apportioning the premium paid by the policyholder equally over the period to which that premium pertains;

(c)  in respect of a life insurance policy, other than a policy referred to in subparagraph a or b, the greater of

i.  the amount determined by the formula

A – B, and

ii.  the amount determined by the formula

C − (D + E);

(d)  in respect of a group life insurance policy, the amount (other than an amount the insurer may deduct under section 832 of the Act because of paragraph b of section 841 of the Act in computing the insurer’s income for its taxation year that includes the particular time) in respect of a dividend, refund of premiums or refund of premium deposits provided for by the policy that will be used by the insurer to reduce or eliminate a future adverse claims experience under the policy or that will be 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, which is the least of

i.  a reasonable amount in respect of such a dividend, refund of premiums or refund of premium deposits,

ii.  25% of the amount of the premium payable under the policy for the 12-month period ending at the particular time, and

iii.  the amount of the reserve or liability in respect of such a dividend, refund of premiums or refund of premium deposits that, if the insurer is required to file an annual report with the Superintendent of Financial Institutions for a period that includes the particular time, is used in preparing that report, and, in any other case, is used in preparing its annual financial statements for the period that includes the particular time; and

(e)  in respect of a policy, other than a policy referred to in subparagraph a, the amount of a benefit, risk or guarantee described in the third paragraph that is equal to the lesser of

i.  a reasonable amount in respect of the benefit, risk or guarantee, and

ii.  the reserve in respect of the benefit, risk or guarantee that, if the insurer is required to file an annual report with the Superintendent of Financial Institutions for a period that includes the particular time, is used in preparing that report, and, in any other case, is used in preparing its annual financial statements for the period that includes the particular time.

In the formulas in the first paragraph,

(a)  A is

i.  if the policy is issued after 31 December 2016 and is not an annuity contract, the cash surrender value of the policy at the particular time determined without reference to surrender charges, and

ii.  in any other case, the cash surrender value of the policy at the particular time;

(b)  B is the aggregate of all amounts each of which is an amount payable at the particular time in respect of a policy loan in respect of the policy;

(c)  C is

i.  if the policy is issued after 31 December 2016 and is not an annuity contract, the net premium reserve in respect of the policy at the particular time, and

ii.  in any other case, the present value at the particular time of the future benefits provided by the policy;

(d)  D is

i.  if the policy is issued after 31 December 2016 and is not an annuity contract, zero, and

ii.  in any other case, the present value at the particular time of any future modified net premiums in respect of the policy; and

(e)  E is the aggregate of all amounts each of which is an amount payable at the particular time in respect of a policy loan in respect of the policy.

The amount of a benefit, risk or guarantee to which subparagraph e of the first paragraph refers is

(a)  an accidental death benefit;

(b)  a disability benefit;

(c)  an additional risk in respect of

i.  a substandard life insurance,

ii.  the conversion of a term insurance policy or the conversion of the benefits under a group insurance policy into another insurance policy after the particular time,

iii.  a settlement option, or

iv.  a guaranteed insurability benefit;

(d)  a guarantee in respect of a segregated fund policy; or

(e)  subject to the prior approval of the Minister on the advice of the Superintendent of Financial Institutions, any other benefit that is ancillary to the policy.

For the purposes of the third paragraph, the amount of a benefit, risk or guarantee to which subparagraph e of the first paragraph refers is not such an amount in respect of which an insurer has deducted an amount in computing its income for its taxation year that includes the particular time.

For the purposes of this section (except subparagraph d of the third paragraph), any amount claimed by an insurer for a taxation year must not include an amount in respect of a liability of a segregated fund.

S.Q. 2019, c. 14, s. 628.