I-3 - Taxation Act

Section 832.12 Disposition versions

2006-03-01

832.12. For the purposes of sections 832.11 to 832.25, the following rules apply:

(a)  subject to paragraphs b to g, if in providing a benefit in respect of a demutualization, a corporation becomes obligated, either absolutely or contingently, to make or arrange a payment, the person to whom the undertaking to make or arrange the payment was given is considered to have received a benefit as a consequence of the undertaking of the obligation and not as a consequence of the making of the payment;

(b)  where, in providing a benefit in respect of a demutualization, a corporation makes a payment, other than a payment, made pursuant to the terms of an insurance policy, that is not a policy dividend, at any time on or before the deadline for the payment,

i.  subject to paragraphs f and g, the recipient of the payment is considered to have received a benefit as a consequence of the making of the payment, and

ii.  no benefit is considered to have been received as a consequence of the undertaking of an obligation, that is either contingent or absolute, to make or arrange the payment;

(c)  no benefit is considered to have been received as a consequence of the undertaking of an absolute or contingent obligation of a corporation to make or arrange a payment, other than a payment, made pursuant to the terms of an insurance policy, that is not a policy dividend, unless it is reasonable to conclude that there is sufficient information with regard to the location of a person to make or arrange the payment;

(d)  where a corporation’s obligation to make or arrange a payment in connection with a demutualization ceases on or before the initial deadline for the payment and without the payment being made in whole or in part, no benefit is considered to have been received as a consequence of the undertaking of the obligation unless the payment was to be a payment, other than a policy dividend, pursuant to the terms of an insurance policy;

(e)  no benefit is considered to have been received as a consequence of the undertaking of an absolute or contingent obligation of a corporation to make or arrange a payment where

i.  paragraph a would, but for this paragraph, apply with respect to the obligation,

ii.  paragraph d would, if that paragraph were read without reference to the words “on or before the initial deadline for the payment”, apply in respect of the obligation,

iii.  it is reasonable to conclude that there was not, before the initial deadline for the payment, sufficient information with regard to the location of a person to make or arrange the payment, and

iv.  such information becomes available on a particular day after the initial deadline, and the obligation ceases not more than six months after the particular day;

(f)  no benefit is considered to have been received as a consequence of an undertaking of an absolute or contingent obligation of a corporation to make or arrange an annuity payment through the issuance of an annuity contract or a receipt of an annuity payment under the contract so issued where it is reasonable to conclude that the purpose of the undertaking or the making of the annuity payment is to supplement benefits provided under either an annuity contract to which paragraph a of section 2.3 and section 965.0.17.2 applied or a group annuity contract that had been issued under, or pursuant to, a registered pension plan that has wound up;

(g)  no benefit is considered to have been received as a consequence of

i.  an amendment to which section 965.0.17.3 would, but for subparagraph b of the first paragraph thereof, apply, or

ii.  a substitution to which paragraph a of section 965.0.17.4 applies;

(h)  the time at which a stakeholder is considered to receive a benefit in connection with the demutualization of an insurance corporation is

i.  where the benefit is a payment made at or before the time of the demutualization or is a payment to which paragraph b applies, the time at which the payment is made, and

ii.  in any other case, the latest of

(1)  the time of the demutualization,

(2)  where the extent of the benefit or the stakeholder’s entitlement to it depends on the outcome of an initial public offering of shares of the corporation or a holding corporation in respect of the insurance corporation and the offering is completed within 13 months after the time of the demutualization, the time at which the offering is completed,

(3)  where the entire amount of the benefit depends on the outcome of an initial public offering of shares of the corporation or a holding corporation in respect of the insurance corporation, the time at which the offering is completed,

(4)  where it is reasonable to conclude that the person conferring the benefit does not have sufficient information with regard to the location of the stakeholder before the later of the times determined under subparagraphs 1 to 3, to advise the stakeholder of the benefit, the time at which sufficient information with regard to the location of the stakeholder to so advise the stakeholder was received by that person, and

(5)  the end of any other day that is acceptable to the Minister;

(i)  the time at which an insurance corporation is considered to demutualize is the time at which it first issues a share of its capital stock, other than shares of its capital stock issued by it when it was a mutual company if the corporation did not cease to be a mutual company because of the issuance of those shares; and

(j)  subject to paragraph b of section 832.13, the value of a benefit received by a stakeholder is the fair market value of the benefit at the time the stakeholder receives the benefit.

2001, c. 53, s. 167.