I-3 - Taxation Act

Section 832.1 Disposition versions

2006-03-01

832.1. Subject to section 832.1.1, where a property of a life insurer resident in Canada that carries on an insurance business in Canada and elsewhere or of an insurer not resident in Canada is described in the second paragraph for a taxation year, the following rules apply:

(a)  the insurer is deemed to have disposed of the property at the beginning of the year for proceeds of disposition equal to its fair market value at that time and to have reacquired the property immediately after that time at a cost equal to that fair market value;

(b)  in the case of property referred to in subparagraph a of the second paragraph, any gain or loss arising from the disposition is deemed not to be a gain or loss from designated insurance property of the insurer for the year; and

(c)  in the case of property referred to in subparagraph b of the second paragraph, any gain or loss arising from the disposition is deemed to be a gain or loss from designated insurance property of the insurer for the year.

A property to which the first paragraph refers for a taxation year is

(a)  designated insurance property for the year that was owned by the insurer at the end of the preceding taxation year and was not designated insurance property of the insurer for that preceding year; or

(b)  property that is not designated insurance property for the year, was owned by the insurer at the end of the preceding taxation year and was designated insurance property of the insurer for that preceding year.

However, the first and second paragraphs shall be disregarded in applying sections 140, 140.1 and 818, subparagraph i of subparagraph e of the first paragraph of section 93 and subparagraph c of the second paragraph of that section where it refers to the capital cost of a property.

1984, c. 15, s. 185; 1985, c. 25, s. 135; 1990, c. 59, s. 311; 1996, c. 39, s. 224; 1998, c. 16, s. 195; 2001, c. 53, s. 166; 2004, c. 8, s. 159.