I-3 - Taxation Act

Section 838.5 Disposition versions

2020-09-24

838.5. For the purposes of Chapter II and this chapter, the following rules apply:

(a)  a risk is deemed to be a specified Canadian risk that is insured as part of the carrying on of an insurance business in Canada by a particular life insurer resident in Canada if

i.  the particular life insurer insured the risk as part of a transaction or series of transactions,

ii.  the risk would not be a specified Canadian risk if this Act were read without reference to this section, and

iii.  it can reasonably be concluded that one of the purposes of the transaction or series of transactions was to avoid

(1)  having a designated foreign insurance business, or

(2)  the application of any of sections 838.1 to 838.4 in respect of the risk; and

(b)  if one or more arrangements or agreements in respect of the risk referred to in paragraph a have been entered into by any of the persons or partnerships described in subparagraphs i to iii of subparagraph b of the first paragraph of section 838.3 (in this paragraph referred to as an “agreeing party”), the following rules apply:

i.  any activities performed in connection with those arrangements or agreements are deemed to be performed in connection with the insurance business that the life insurer referred to in subparagraph i or ii of that subparagraph b, as the case may be, carries on in Canada, and

ii.  if the agreeing party is a life insurer resident in Canada, any income from the activities referred to in subparagraph i (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.