I-3 - Taxation Act

Section 832.24 Disposition versions

2006-03-01

832.24. The rules set out in the second paragraph apply where

(a)  because of the interest of any person in an insurance policy, a stakeholder receives a conversion benefit, other than a taxable conversion benefit, that consists of shares of the capital stock of a corporation;

(b)  the stakeholder referred to in subparagraph a transfers some or all of the shares referred to in that subparagraph at any time to a particular individual

i.  who has received benefits under the insurance policy referred to in subparagraph a,

ii.  who has, or had at any time, an absolute or contingent right to receive benefits under the insurance policy,

iii.  for whose benefit insurance coverage was provided under the insurance policy, or

iv.  who received the shares because an individual satisfied the condition in subparagraph i, ii or iii;

(c)  it is reasonable to conclude that the purpose of the transfer referred to in subparagraph b is to distribute all or any portion of the conversion benefit referred to in subparagraph a to the particular individual referred to in subparagraph b;

(d)  either the main purpose of the insurance policy referred to in subparagraph a was to provide retirement benefits or insurance coverage to individuals in respect of their employment with an employer, or all or part of the cost of insurance coverage under the insurance policy had been borne by individuals other than the stakeholder referred to in subparagraph a;

(e)  section 832.21 does not apply to the conversion benefit referred to in subparagraph a; and

(f)  one of the following subparagraphs applies, namely,

i.  the particular individual referred to in subparagraph b is resident in Canada at the time of the transfer referred to in that subparagraph, the stakeholder referred to in subparagraph a is a person the taxable income of which is exempt from tax under this Part and the amount of the transfer would, if this chapter were read without reference to this section, be included in computing the income of the particular individual,

ii.  the transfer referred to in subparagraph b is made before 7 December 1999 and the stakeholder referred to in subparagraph a elects by notifying the Minister in writing, on a day that is not more than six months after the end of the taxation year in which the stakeholder receives the conversion benefit referred to in subparagraph a, or a later day acceptable to the Minister, that this section applies in respect of the transfer,

iii.  the transfer referred to in subparagraph b is made after 6 December 1999, the amount of the transfer would, if this chapter were read without reference to this section, be included in computing the income of the particular individual referred to in that subparagraph and the stakeholder referred to in subparagraph a elects by notifying the Minister in writing, on a day that is not more than six months after the end of the taxation year in which the stakeholder receives the conversion benefit referred to in subparagraph a, or a later day acceptable to the Minister, that this section applies in respect of the transfer, or

iv.  the transfer referred to in subparagraph b is made after 6 December 1999 and the amount of the transfer would, if this chapter were read without reference to this section, not be included in computing the income of the particular individual referred to in that subparagraph.

The rules to which the first paragraph refers are the following:

(a)  no amount is, because of the transfer, deductible in computing the stakeholder’s income;

(b)  except for the purposes of this section and without affecting the consequences to the particular individual of any transaction or event that occurs after the time that the transfer was made, the transfer is deemed not to have been made to the particular individual nor to represent an amount payable to the particular individual; and

(c)  the cost of the shares to the particular individual is deemed to be nil.

2001, c. 53, s. 167.