I-3 - Taxation Act

Section 970 Disposition versions

2006-03-01

970. Where the holder of a life insurance policy, other than an annuity contract, last acquired before 2 December 1982 becomes, under the terms of the policy, entitled to receive from the insurer, at any time before the death of the person insured under such policy, all of the proceeds payable at that time, other than policy dividends, under the policy in the form of an annuity contract or annuity payments, the following rules apply:

(a)  the payments shall be regarded as annuity payments made under an annuity contract;

(b)  the purchase price of the annuity contract is deemed to be the adjusted cost basis of the policy to the holder immediately before the first payment under that contract becomes payable; and

(c)  the annuity contract or annuity payments are deemed not to be the proceeds of disposition of an interest in the policy.

1972, c. 23, s. 702; 1984, c. 15, s. 225; 1986, c. 19, s. 177.