I-3 - Taxation Act

Section 967 Disposition versions

2021-06-02

967. For the purposes of sections 157.5, 968, 976 and 976.1,

(a)  a policyholder who, at any time, becomes entitled to receive under a life insurance policy, a particular amount as, on account or in lieu of payment of, or in satisfaction of, a policy dividend is deemed

i.  to have disposed of an interest in the policy at that time, and

ii.  to have become entitled to receive proceeds of the disposition of the interest equal to the amount by which

(1)  the particular amount exceeds

(2)  the part of the particular amount applied immediately after that time to pay a premium under the policy or to repay a policy loan under the policy, as provided for under the terms and conditions of the policy;

(b)  where in a taxation year, the holder of an interest in a life insurance policy or in an annuity contract dies or where the person whose life was insured or who was an annuitant under the contract or policy dies,

i.  the policyholder, where the policy was last acquired after 1 December 1982 and is not an exempt policy or an annuity contract, is deemed to dispose of his interest in the policy immediately before the death and the policyholder immediately after such death is deemed to have acquired the interest at a cost equal to the accumulating fund in respect of that interest, as determined in prescribed manner, immediately after the death; and

ii.  the holder of the contract, where the contract is neither a life annuity contract within the meaning of the regulations under section 966, entered into before 13 November 1981, nor a prescribed annuity contract is deemed to dispose of his interest in the contract immediately before the death and the holder of the contract immediately after the death is deemed to have acquired the interest at a cost equal to the accumulating fund in respect of that interest, as determined in prescribed manner, immediately after the death;

(c)  where a life insurance policy last acquired after 1 December 1982, or a life insurance policy to which section 92.17 applies by virtue of a prescribed increase of a death benefit under the policy, ceases to be an exempt policy, the policyholder is deemed to dispose of his interest in the policy at that time for proceeds of disposition equal to the accumulating fund with respect to the interest, as determined in prescribed manner, at that time and to reacquire the interest immediately after that time at a cost equal to such proceeds unless the policy ceased to be an exempt policy in consequence of the death of an individual whose life was insured under the policy or at a time when that individual was totally and permanently disabled;

(d)  a policyholder with an interest in a life insurance policy issued after 31 December 2016 that gives rise to an entitlement of the policyholder (as a policyholder, beneficiary or assignee, as the case may be) to receive all or a portion of an excess described in subparagraph iv is deemed, at a particular time, to dispose of a part of the interest and to be entitled to receive proceeds of the disposition equal to all or a portion of that excess, as the case may be, if

i.  the policy is an exempt policy,

ii.  a death benefit, within the meaning of section 92.11R1 of the Regulation respecting the Taxation Act (chapter I-3, r. 1), under a coverage, within the meaning of paragraph a of the definition of that expression in the first paragraph of that section 92.11R1, under the policy is paid at the particular time,

iii.  the payment referred to in subparagraph ii results in the termination of the coverage but not the policy, and

iv.  the amount of the fund value benefit, within the meaning of section 92.11R1 of the Regulation respecting the Taxation Act, paid in respect of the coverage at the particular time exceeds

(1)  in the case where there is no policy anniversary, within the meaning of section 92.11R1 of that Regulation, before the date of death of the individual whose life is insured under the coverage, the amount that would be determined—on the policy anniversary that is on or that first follows that date of death, as the case may be, and as though the coverage were not terminated—in respect of the coverage under subparagraph 1 of subparagraph i of subparagraph b of the second paragraph of section 92.19R4 of that Regulation, or

(2)  in any other case, the amount that is determined—on the last policy anniversary before the date of death of the individual whose life is insured under the coverage—in respect of the coverage under subparagraph 1 of subparagraph i of subparagraph b of the second paragraph of section 92.19R4 of that Regulation as that subparagraph 1 applies in respect of subparagraph ii of subparagraph b of the first paragraph of section 92.19R1 of that Regulation.

1972, c. 23, s. 699; 1978, c. 26, s. 182; 1984, c. 15, s. 224; 1986, c. 19, s. 174; 1993, c. 16, s. 314; 1994, c. 22, s. 305; 1996, c. 39, s. 273; 2001, c. 53, s. 207; 2019, c. 14, s. 284; 2021, c. 14, s. 112.

2019-06-19

967. For the purposes of sections 157.5, 968, 976 and 976.1,

(a)  a policyholder who, at any time, becomes entitled to receive under a life insurance policy, a particular amount as, on account or in lieu of payment of, or in satisfaction of, a policy dividend is deemed

i.  to have disposed of an interest in the policy at that time, and

ii.  to have become entitled to receive proceeds of the disposition of the interest equal to the amount by which

(1)  the particular amount exceeds

(2)  the part of the particular amount applied immediately after that time to pay a premium under the policy or to repay a policy loan under the policy, as provided for under the terms and conditions of the policy;

(b)  where in a taxation year, the holder of an interest in a life insurance policy or in an annuity contract dies or where the person whose life was insured or who was an annuitant under the contract or policy dies,

i.  the policyholder, where the policy was last acquired after 1 December 1982 and is not an exempt policy or an annuity contract, is deemed to dispose of his interest in the policy immediately before the death and the policyholder immediately after such death is deemed to have acquired the interest at a cost equal to the accumulating fund in respect of that interest, as determined in prescribed manner, immediately after the death; and

ii.  the holder of the contract, where the contract is neither a life annuity contract within the meaning of the regulations under section 966, entered into before 13 November 1981, nor a prescribed annuity contract is deemed to dispose of his interest in the contract immediately before the death and the holder of the contract immediately after the death is deemed to have acquired the interest at a cost equal to the accumulating fund in respect of that interest, as determined in prescribed manner, immediately after the death;

(c)  where a life insurance policy last acquired after 1 December 1982, or a life insurance policy to which section 92.17 applies by virtue of a prescribed increase of a death benefit under the policy, ceases to be an exempt policy, the policyholder is deemed to dispose of his interest in the policy at that time for proceeds of disposition equal to the accumulating fund with respect to the interest, as determined in prescribed manner, at that time and to reacquire the interest immediately after that time at a cost equal to such proceeds unless the policy ceased to be an exempt policy in consequence of the death of an individual whose life was insured under the policy or at a time when that individual was totally and permanently disabled;

(d)  where, in respect of a life insurance policy issued after 31 December 2016 that is an exempt policy, a death benefit, within the meaning of section 92.11R1 of the Regulation respecting the Taxation Act (chapter I-3, r. 1), under a coverage, within the meaning of paragraph b of the definition of that expression in the first paragraph of that section 92.11R1, under the policy is paid at a particular time, the payment results in the termination of the coverage but not the policy and the amount of the fund value benefit, within the meaning of that section 92.11R1, paid in respect of the coverage at that time exceeds the amount determined in respect of the coverage under subparagraph 1 of subparagraph i of subparagraph b of the second paragraph of section 92.19R4 of that Regulation on the policy anniversary, within the meaning of section 92.11R1 of that Regulation, that is on, or that first follows, the date of the death of an individual whose life is insured under the coverage, a policyholder with an interest in the policy that gives rise to an entitlement of the policyholder to receive all or a portion of that excess as a policyholder, beneficiary or assignee, as the case may be, is deemed, at that time, to dispose of a part of the interest and to be entitled to receive proceeds of the disposition equal to that excess or portion, as the case may be.

1972, c. 23, s. 699; 1978, c. 26, s. 182; 1984, c. 15, s. 224; 1986, c. 19, s. 174; 1993, c. 16, s. 314; 1994, c. 22, s. 305; 1996, c. 39, s. 273; 2001, c. 53, s. 207; 2019, c. 14, s. 284.

2006-03-01

967. For the purposes of sections 157.5, 968, 976 and 976.1,

(a)  a policyholder who, at any time, becomes entitled to receive under a life insurance policy, a particular amount as, on account or in lieu of payment of, or in satisfaction of, a policy dividend is deemed

i.  to have disposed of an interest in the policy at that time, and

ii.  to have become entitled to receive proceeds of the disposition of the interest equal to the amount by which

(1)  the particular amount exceeds

(2)  the part of the particular amount applied immediately after that time to pay a premium under the policy or to repay a policy loan under the policy, as provided for under the terms and conditions of the policy;

(b)  where in a taxation year, the holder of an interest in a life insurance policy or in an annuity contract dies or where the person whose life was insured or who was an annuitant under the contract or policy dies,

i.  the policyholder, where the policy was last acquired after 1 December 1982 and is not an exempt policy or an annuity contract, is deemed to dispose of his interest in the policy immediately before the death and the policyholder immediately after such death is deemed to have acquired the interest at a cost equal to the accumulating fund in respect of that interest, as determined in prescribed manner, immediately after the death; and

ii.  the holder of the contract, where the contract is neither a life annuity contract within the meaning of the regulations under section 966, entered into before 13 November 1981, nor a prescribed annuity contract is deemed to dispose of his interest in the contract immediately before the death and the holder of the contract immediately after the death is deemed to have acquired the interest at a cost equal to the accumulating fund in respect of that interest, as determined in prescribed manner, immediately after the death;

(c)  where a life insurance policy last acquired after 1 December 1982, or a life insurance policy to which section 92.17 applies by virtue of a prescribed increase of a death benefit under the policy, ceases to be an exempt policy, the policyholder is deemed to dispose of his interest in the policy at that time for proceeds of disposition equal to the accumulating fund with respect to the interest, as determined in prescribed manner, at that time and to reacquire the interest immediately after that time at a cost equal to such proceeds unless the policy ceased to be an exempt policy in consequence of the death of an individual whose life was insured under the policy or at a time when that individual was totally and permanently disabled.

1972, c. 23, s. 699; 1978, c. 26, s. 182; 1984, c. 15, s. 224; 1986, c. 19, s. 174; 1993, c. 16, s. 314; 1994, c. 22, s. 305; 1996, c. 39, s. 273; 2001, c. 53, s. 207.