I-3 - Taxation Act

Section 832.7 Disposition versions

2023-09-26

832.7. Where, at any time in a taxation year, an insurer (in this section referred to as the “vendor”) has disposed of all or substantially all of an insurance business carried on by it in Canada, or of a line of business of such a business, to a person (in this section referred to as the “purchaser”) and obligations in respect of the business or line of business, as the case may be, in respect of which a reserve may be claimed under the second paragraph of section 152 or paragraph a of section 840 were assumed by the purchaser, the following rules apply:

(a)  for the purpose of determining the amount of the gross investment revenue required to be included in computing the income of the vendor and the purchaser under the first paragraph of section 825 and the amount of the gains and losses of the vendor and the purchaser from designated insurance property for the year,

i.  the vendor and the purchaser are deemed, in addition to their normal taxation years, to have had a taxation year ending immediately before that time;

ii.  for the taxation years of the vendor and the purchaser following that time, the business or line of business, as the case may be, disposed of to the purchaser is deemed to have been disposed of on the last day of the taxation year referred to in subparagraph i, and the obligations assumed by the purchaser are deemed to have been assumed on the last day of that taxation year;

(b)  for the purposes of computing the income of the vendor and the purchaser for taxation years ending after that time, the following amounts are deemed to have been paid or payable or received or receivable, as the case may be, by the vendor or the purchaser, as the case may be, in the course of carrying on the business or line of business, as the case may be:

i.  an amount paid or payable by the vendor to the purchaser in respect of the obligations;

ii.  an amount in respect of a commission paid or payable by the purchaser to the vendor in respect of an amount referred to in subparagraph i.

1990, c. 59, s. 314; 1998, c. 16, s. 198; 2023, c. 19, s. 66.

2006-03-01

832.7. Where, at any time in a taxation year, an insurer, in this section referred to as the “vendor”, has disposed of all or substantially all of an insurance business carried on by it in Canada, or of a line of business of such a business, to a person, in this section referred to as the “purchaser”, and obligations in respect of the business or line of business, as the case may be, in respect of which a reserve may be claimed under the second paragraph of section 152 or paragraph a or a.1 of section 840 were assumed by the purchaser, the following rules apply:

(a)  for the purpose of determining the amount of the gross investment revenue required to be included in computing the income of the vendor and the purchaser under the first paragraph of section 825 and the amount of the gains and losses of the vendor and the purchaser from designated insurance property for the year,

i.  the vendor and the purchaser are deemed, in addition to their normal taxation years, to have had a taxation year ending immediately before that time;

ii.  for the taxation years of the vendor and the purchaser following that time, the business or line of business, as the case may be, disposed of to the purchaser is deemed to have been disposed of on the last day of the taxation year referred to in subparagraph i, and the obligations assumed by the purchaser are deemed to have been assumed on the last day of that taxation year;

(b)  for the purposes of computing the income of the vendor and the purchaser for taxation years ending after that time, the following amounts are deemed to have been paid or payable or received or receivable, as the case may be, by the vendor or the purchaser, as the case may be, in the course of carrying on the business or line of business, as the case may be:

i.  an amount paid or payable by the vendor to the purchaser in respect of the obligations;

ii.  an amount in respect of a commission paid or payable by the purchaser to the vendor in respect of an amount referred to in subparagraph i.

1990, c. 59, s. 314; 1998, c. 16, s. 198.