I-3 - Taxation Act

Section 971.2 Disposition versions

2006-03-01

971.2. Notwithstanding any other provision of this Title, where an interest of a policyholder in a life insurance policy, other than a policy referred to in the second paragraph of section 968, has been transferred to the policyholder’s spouse or a former spouse of the policyholder in settlement of rights arising out of their marriage, and both the policyholder and the transferee were resident in Canada at the time of the transfer, the interest is deemed to have been disposed of by the policyholder for proceeds of the disposition equal to the adjusted cost basis to the policyholder of the interest immediately before the transfer and to have been acquired by the transferee at a cost equal to those proceeds.

The first paragraph does not apply where the policyholder makes a valid election under subsection 8.1 of section 148 of the Income Tax Act (Revised Statutes of Canada, 1985, chapter 1, 5th Supplement) to have that subsection not apply in respect of the transfer.

1993, c. 16, s. 316; 1994, c. 22, s. 307; 1997, c. 85, s. 227.