I-3 - Taxation Act

Section 838.3 Disposition versions

2020-09-24

838.3. The rules set out in the second paragraph apply in respect of one or more arrangements or agreements if

(a)  one or more risks insured by a particular life insurer resident in Canada are deemed, under section 838.2, to be specified Canadian risks; and

(b)  those arrangements or agreements are in respect of risks described in subparagraph a and have been entered into by any of the following (in the second paragraph referred to as an “agreeing party”):

i.  the particular life insurer,

ii.  another life insurer resident in Canada that does not deal at arm’s length with the particular life insurer, and

iii.  a partnership of which an insurer described in subparagraph i or ii is a member.

The rules to which the first paragraph refers, in respect of one or more arrangements or agreements, are as follows:

(a)  to the extent that activities performed in connection with those arrangements or agreements can reasonably be considered to be performed for the purpose of obtaining the result described in subparagraph ii of paragraph a.21 of subsection 2 of section 95 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)), with the necessary modifications, those activities are deemed to be performed in connection with the insurance business that the life insurer referred to in subparagraph i or ii of subparagraph b of the first paragraph, as the case may be, carries on in Canada; and

(b)  if the agreeing party is a life insurer resident in Canada, any income from the activities referred to in subparagraph a (including income that pertains to or is incident to those activities) is deemed to be income from carrying on the life insurer’s insurance business in Canada.

2020, c. 16, s. 124.