I-3 - Taxation Act

Section 976.2 Disposition versions

2021-06-02

976.2. The amount to which paragraph j of section 976.1 refers in respect of the termination of a coverage under a policy referred to in that paragraph is determined by the formula

[A × (B + C + D) / E] − F.

In the formula in the first paragraph,

(a)  A is the adjusted cost basis of the policyholder’s interest immediately before the termination;

(b)  B is the amount of the fund value of the policy, within the meaning of section 92.11R1 of the Regulation respecting the Taxation Act (chapter I-3, r. 1), paid in respect of the coverage, within the meaning of paragraph a of the definition of that expression in the first paragraph of section 92.11R1 of that Regulation, on the termination;

(c)  C is the aggregate of all amounts—each of which is an amount in respect of a coverage, within the meaning of paragraph b of the definition of that expression in the first paragraph of section 92.11R1 of the Regulation respecting the Taxation Act, in respect of a specific life or two or more specific lives jointly insured under the coverage referred to in paragraph j of section 976.1—that would be the present value, determined for the purposes of Division II of Chapter IV of Title XI of that Regulation, on the last policy anniversary, within the meaning of that section 92.11R1, on or before the termination, of the fund value of the coverage, within the meaning of that section 92.11R1, if the fund value of the coverage on that policy anniversary were equal to the fund value of the coverage on the termination;

(d)  D is the aggregate of all amounts—each of which is an amount in respect of a coverage, within the meaning of paragraph b of the definition of that expression in the first paragraph of section 92.11R1 of the Regulation respecting the Taxation Act (in this subparagraph referred to as a “particular coverage”) in respect of a specific life or two or more specific lives jointly insured under the coverage referred to in paragraph j of section 976.1—that, on the policy anniversary referred to in subparagraph c, would be determined under subparagraph c of the fourth paragraph of section 92.11R1.1 of that Regulation in respect of the particular coverage, if the death benefit under the particular coverage, and the fund value of the coverage, within the meaning of that section 92.11R1, on that policy anniversary were equal to the death benefit under the particular coverage and the fund value of the coverage, respectively, on the termination;

(e)  E is the amount that would be, on the policy anniversary referred to in subparagraph c, the net premium reserve, within the meaning of section 92.11R1 of the Regulation respecting the Taxation Act, determined in respect of the policy for the purposes of Division II of Chapter IV of Title XI of that Regulation, if the fund value benefit, within the meaning of that section 92.11R1, under the policy, the death benefit under each coverage, within the meaning of paragraph b of the definition of that expression in the first paragraph of that section 92.11R1, and the fund value of each coverage, within the meaning of that section 92.11R1, on that policy anniversary were equal to the fund value benefit, the death benefit under each coverage and the fund value of each coverage, respectively, under the policy on the termination; and

(f)  F is the amount determined under section 977.1 in respect of a disposition before that time of the interest because of paragraph d of section 967 in respect of the payment in respect of the fund value benefit under the policy paid in respect of the coverage, within the meaning of paragraph a of the definition of that expression in the first paragraph of section 92.11R1 of the Regulation respecting the Taxation Act, on the termination.

2019, c. 14, s. 290; 2021, c. 14, s. 116.

2019-06-19

976.2. The amount to which paragraph j of section 976.1 refers in respect of the termination of a coverage under a policy referred to in that paragraph is determined by the formula

[A × (B + C + D) / E] − F.

In the formula in the first paragraph,

(a)  A is the adjusted cost basis of the policyholder’s interest immediately before the termination;

(b)  B is the amount of the fund value of the policy, within the meaning of section 92.11R1 of the Regulation respecting the Taxation Act (chapter I-3, r. 1), paid in respect of the coverage on the termination;

(c)  C is the amount that would be the present value, determined for the purposes of Division II of Chapter IV of Title XI of the Regulation respecting the Taxation Act, on the last policy anniversary, within the meaning of section 92.11R1 of that Regulation, on or before the termination, of the fund value of the coverage, within the meaning of that section 92.11R1, if the fund value of the coverage on that policy anniversary were equal to the fund value of the coverage on the termination;

(d)  D is the amount that, on the policy anniversary referred to in subparagraph c, would be determined under subparagraph f of the fourth paragraph of section 92.11R1.1 of the Regulation respecting the Taxation Act in respect of the coverage, if the death benefit under the coverage, and the fund value of the coverage, on that policy anniversary were equal to the death benefit under the coverage and the fund value of the coverage, respectively, on the termination;

(e)  E is the amount that would be, on the policy anniversary referred to in subparagraph c, the net premium reserve, within the meaning of section 92.11R1 of the Regulation respecting the Taxation Act, determined in respect of the policy for the purposes of Division II of Chapter IV of Title XI of that Regulation, if the fund value benefit under the policy, the death benefit under each coverage and the fund value of each coverage on that policy anniversary were equal to the fund value benefit, the death benefit under each coverage and the fund value of each coverage, respectively, under the policy on the termination; and

(f)  F is the amount determined under section 977.1 in respect of a disposition before that time of the interest because of paragraph d of section 967 in respect of the payment in respect of the fund value benefit under the policy paid in respect of the coverage on the termination.

2019, c. 14, s. 290.