7 October 2016 APFF Financial Strategies and Instruments Roundtable
Translation and provisional status disclaimer
The translated written responses provided further below were prepared by Tax Interpretations Inc. The CRA did not issue these responses in the language in which they now appear, and is not responsible for any errors in their translation that might impact a reader’s understanding of them or the position(s) taken therein. Furthermore, the written answers were accompanied by a detailed CRA disclaimer warning inter alia that they were subject to change before their release in final form. See also the general Disclaimer below.
This page provides summaries of questions posed at the 7 October 2016 Roundtable on Financial Strategies and Instruments together with translations of the provisional versions of the CRA written responses (which had been orally presented by Mélanie Beaulieu and Louise Roy), which are being added in sequence. Where applicable, summaries of questions posed to a representative of the Department of Finance (Robert Duong) have also been summarized, together with a translation of his written answers.
Q.1 Shareholder benefit re transfer of critical illness insurance policy to shareholder
At the 2015 APFF Roundtable on Financial Strategies and Instruments, Q.1, CRA stated, respecting a transfer of critical illness insurance policy by Opco to Holdco, that:
the gain or loss realized on the disposition of a critical illness insurance policy is generally of a capital nature. However, by reason of the exception stipulated in subparagraph 39(1)(a)(iii) and (ii), this gain or loss will not be taxable as a capital gain or deducted as a capital loss for purposes of the Income Tax Act. Furthermore, the provisions of section 148 would not apply… .
Would the direct transfer for no consideration of a critical illness insurance policy by Opco (which was the policyholder, beneficiary and had paid all the premiums) to its shareholder (so that the shareholder became the holder and beneficiary) result in the application of s. 15(1)?
CRA written response
The CRA comments included above (from the CRA response to question 1 of the 2015 APFF Financial Strategies and Financial Instruments Roundtable) concerning the tax treatment for Opco would be also be relevant respecting a transfer of critical illness insurance policy by Opco to the shareholder.
However, in a situation such as described above, the shareholder who received the critical illness insurance policy from Opco for no consideration would generally be required to include the value of the benefit in computing income by virtue of subsection 15(1). Determining the value of a benefit is a question of fact that cannot be resolved until after a thorough analysis of the facts of a particular situation. In the situation described above, the value of the benefit could correspond to the FMV of the policy.
Q.2 Transfer out of deceased’s RRIF in subsequent year
At Mr. X’s death in November 2015, he held a registered retirement income fund (RRIF) with a fair market value (FMV) of $140,000, which stayed at that level until that sum was distributed in January 2016 to his executor who, in turn, transferred that sum to Mrs. X as the sole beneficiary. The minimum amounts for 2015 and 2016 were $11,000 and $10,000, respectively. In accordance with s. 146.3(6.2), $140,000 was deducted from the income amount that the deceased was deemed to receive under s. 146.3(6). Can CRA confirm that $140,000 was the eligible amount of Mrs. X under s. 146.3(6.11), so that this amount can be transferred to her RRIF or RRSP, or to purchase an annuity, under s. 60(l)(v)?
CRA written response
Element C in the formula in subsection 146.3(6.11) of the Act is the lesser of:
(a) the total amounts included because of subsection 146.3(5) in computing the income of the deceased annuitant under the fund for the year in respect of amounts received or deemed to have been received by the annuitant out of or under the fund, and
(b) the minimum amount to be withdrawn under the fund for the year as defined in subsection 146.3(1).
To arrive at an eligible amount of $140,000, you are interpreting the phrase "for the year" in variable (a) of element C of this formula as referring to the year of death of the annuitant and you are using the year when the spouse received the designated benefit for the rest of the formula.
The CRA cannot confirm your interpretation of the computation of the eligible amount under subsection 146.3(6.11). The CRA is of the view that all elements of the formula refer to the same year, being the year referred to in the preamble of subsection 146.3(6.11). This year refers to the taxation year referred to in paragraph 60(l), which is the year of the inclusion of the designated benefit in computing the spouse's income under subsection 146.3(5).
In your example, the taxation year in element C of the formula in subsection 146.3(6.11) is the year 2016, which is the taxation year in which Mrs X is required to include the designated benefit in computing her income by reason of the combined application of subsections 146.3(6.1) and 146.3(5). Since the RRIF annuitant died in the prior year, the lesser of the amounts in variables (a) and (b) of element C of this formula will be the amount of variable (a), which is nil. Indeed, no amount will be included in computing the deceased annuitant's income by virtue of subsection 146.3(5) for the taxation year subsequent to that of death.
In your example, taking as given that the portion of the designated benefit of the individual which is included in computing the income of the spouse under subsection 146.3(5) is $140,000, then the eligible amount in your example would be $130,000.
In summary, although there is no requirement to pay the minimum amount after the death of the last annuitant under a RRIF where the withdrawal is made in a year subsequent to the year of death, the amount that the spouse of the deceased annuitant can claim as a deduction under paragraph 60(I) must be reduced by the "minimum" amount for the year.
Q.3 Deemed proceeds on life insurance policy transfer
Mr. X, who has for a number of years been the policy holder of a term life insurance policy (for 100 years) without a cash surrender value and an adjusted cost basis of $10,000, transfers the policy to his wholly-owned corporation (ABC Inc.) for no consideration, so that it becomes the policyholder and beneficiary and assumes the premium-payment obligations.
(a) Would Mr. X’s proceeds of disposition under proposed s. 148(7)(a) be $10,000 given that there is no “consideration…given” and that s. 69(1)(b) only deems proceeds to have been “received”?
(b) At the 2005 CALU Roundtable, CRA indicated that s. 69(5) (respecting a s. 88(2) wind-up) prevailed over s. 148(7). However, in 920437, CRA indicated that s. 148(7) prevailed over the more general rule in s. 52(2). Is CRA prepared to recognize the primacy of s. 148(7) given its specific nature?
CRA written response to Q.3(a)
Since the preamble to subsection 69(1) provides that it is applicable "except as expressly otherwise provided in this Act," it follows that proposed paragraph 148(7)(a) prevails over paragraph 69(1)( b).
Given the above, Mr. X is deemed to have become entitled to receive proceeds of disposition equal to $10,000 under proposed paragraph 148(7)(a).
CRA written response to Q.3(b)
In the two Roundtables referenced above, the CRA stated that, as a general rule, where there is a conflict between two provisions of the same statute, the specific provision prevails over the more general provision. In this case, there was no clear indication to allow the CRA to determine which of these two provisions was the most specific. Although at first glance the CRA was inclined to consider that subsection 69(5) would apply if the disposition of an interest in a life insurance policy occurs during a winding-up governed by subsection 88(2), the CRA wished to examine this question in light of all facts and circumstances surrounding the given particular situation, such as in the context of a request for a tax ruling, to ensure that there was a reasonable result.
Furthermore, the Explanatory Notes accompanying the Proposals state that "[s]ubsection 148(7) is amended to ensure that amounts are not inappropriately received tax-free by a policyholder as a result of a disposition of an interest in a life insurance policy.”
Given the above and the limited scope of the proposed amendments with respect to the disposition of an interest in a life insurance policy, the CRA is of the view that the comments made at the two Roundtables are still valid.
Q.4 Ss. 45(2) and (3) elections re duplexes or triplexes
In 2011-0417471E5 and 2011-0420171E5, CRA indicated that it is not possible to make the s 45(3) election respecting a duplex which the individual had previously used as a principal residence, as the duplex constituted a single property. Our understanding is that the same principle applies for s. 45(2) purposes, e.g., where the individual commences to rent the individual’s own duplex unit.
Question for Finance
What is the underlying policy respecting changes in use of a multiple-unit dwelling?
The elections under subsections 45(2) and 45(3) of the Income Tax Act are intended to relieve taxpayers from tax which might otherwise arise from a change in use of their property. We understand the concerns raised by the question, since it concerns the ineligibility of individuals for the relief provided by these rules in situations involving a change of use of part of a property as contrasted to a change of use of the entire property. We will consider the concerns and issues raised in this question as part of our ongoing review of the Income Tax Act rules.
Question for CRA
What should an individual do who, a number of years ago, changed the use of a duplex within the scope of s. 45(3) in reliance on the previous CRA position and is now confronted by this new policy?
CRA written response
Where a taxpayer changes, in whole or in part, the use made of a property, subsection 45(1) provides inter alia that the taxpayer is deemed to have disposed of the property, or the part thereof, as the case may be, at that time and have immediately thereafter reacquired the property, or part thereof, as the case may be. These rules can result in a capital gain or loss for the taxpayer.
However, where at any time a property that was acquired by a taxpayer for the purpose of gaining or producing income ceases to be used for that purpose and becomes the principal residence of the taxpayer, subsection 45(3) permits electing, by written notice to the Minister within the specified time, to be deemed not to have so disposed of the property at that time and to have reacquired it immediately thereafter.
In Technical Interpretation 2011-0417471E5 dated February 21, 2012, the CRA took the position that a building is normally considered to be a single property for the purposes of subsection 45(1) unless the property had been legally divided into two or more separate properties. Thus, a change of use of a duplex unit is generally a partial change of use within the meaning of paragraph 45(1)(c) and therefore, such a change cannot be the subject of an election under subsection 45(3).
The CRA therefore no longer accepts an election under subsection 45(3) for a change of use referred to in the position taken on February 21, 2012 where this change occurred after that date.
However, the CRA continues to accept an election made under subsection 45(3) after February 21, 2012 for a change of use referred to in the position taken February 21, 2012 where this change of use has been made on or before February 21, 2012 and where it also qualified for this election prior to this position being taken.
Supplement to Q.4: carryforward of 2013 APFF Roundtable, Q. 2 re triplex:
If a duplex was a single property, the election of February 22, 1994 respecting the elimination of the $100,000 capital gains exemption would be engaged by a disposition of the unit occupied by the owner, thereby forcing the making of a decision as to whether to designate the residence as a principal residence, to the detriment of such a designation for the individual’s chalet.
Where an individual owning a triplex occupies 40% of it, can the related land give rise to an allowable capital loss? How does the February 22, 1994 election apply in such a case?
CRA written response
According to section 948 of the Civil Code of Québec, ownership of property gives a right to what it produces and to what is united to it, naturally or artificially, from the time of union. This right is called a right of accession. An owner of a property (e.g. land) is the owner by accession to all buildings and structures on the property. Therefore, a building and the land on which the building is located are a single property under the private law applicable in Québec.
Subsection 1102(2) of the Income Tax Regulations ("I.T.R.") constitutes an exception to this rule in the tax context, but only for the purposes of certain provisions of the Income Tax Act. Indeed, subsection 1102(2) I.T.R. provides that the classes of property described in Schedule II shall be deemed not to include the land upon which a property described therein was constructed or is situated. Subject to subsection 13(21.1) of the Act, this provision, however, applies only for the purposes of calculating capital cost allowance, and recapture or terminal loss.
Consequently, where a taxpayer realizes a capital loss on the disposition of a property comprising a building and the land upon which it is situated, subparagraph 40(2)(g)(iii) effectively denies the loss only if the property is a PUP under section 54.
February 22, 1994 election
Regarding the February 22, 1994 election, the CRA still considers as valid the form, Election to Report a Capital Gain on Property Owned at the End February 22, 1994, filed by a taxpayer in accordance with the instructions and information available at that time.
Q.5 Non-application of ss. 146(16) and 73(1) following death
Mr agreed in his separation agreement with Mrs to transfer to her a capital property with a value of $300,000, and $200,000 held in his RRSP. However, he died before the transfers were made, so that ss. 146(16) and 73(1) could no longer apply. Since at the moment of his death, Mrs no longer was his spouse, the s. 146(1) refund of premiums definition and s. 70(6) did not apply.
Question to Finance
What is the underlying policy for rules forbidding tax-free transfers between spouses after the death of a spouse wishing to make the transfer?
In accordance with paragraph 146(16)(b) of the Income Tax Act (ITA), an amount in a registered retirement savings plan (RRSP) may be paid prior to maturity of the RRSP, to the RRSP or registered retirement income fund (RRIF) of the spouse or common-law partner of the annuitant (or former spouse or former common-law partner of the annuitant), if the annuitant's spouse or common-law partner (or ex- spouse or former common-law partner) are living separate and apart and the transfer is made under a decree, order or judgment of a competent tribunal, or under a written separation agreement, relating to a division of property between these people in a settlement of rights arising out of, or on the breakdown of, their marriage or common-law partnership.
Under subsection 73(1) of the ITA, an individual can transfer an asset to the indiviual’s spouse or common-law partner (on a rollover basis) if the individual and the spouse or common-law partner are resident in Canada at the time of the transfer. This subsection also applies so as to prevent an individual who is a trust from making a transfer of property after the death of the individual.
Consequently, pursuant to paragraph 146(10)(b) and subsection 73(1), the individual and his or her spouse (or former spouse or former common-law partner) must be alive at the time of the transfer. Where one of them dies before a transfer of property, those rules do not apply and therefore the transfer cannot be effected on a tax-deferred basis even if the spouse or common-law partner (or former spouse or former common-law partner) has rights to the property under a decree, order or judgment of a competent tribunal, or under a written separation agreement, relating to a division of property between these people in a settlement of rights arising out of, or on the breakdown of, their marriage or common-law partnership.
By virtue of subsection 146(8.8), where an RRSP annuitant dies before the maturity of the RRSP, the annuitant is deemed to have received, immediately before the annuitant’s death, an amount as a benefit equal to the fair market value of all the property of the plan at the time of death, which is to be included in the annuitant's income for the year of death. Consequently, the property to which the spouse or common-law partner (or former spouse or former common-law partner) is entitled shall be transferred on an after-tax basis.
The Department of Finance is ready to consider the issue identified in the question to determine whether the rules give rise to anomalies in certain circumstances in tax policy terms, in the context of its on-going revision of the ITA rules.
Question to CRA
Does CRA still consider that ss. 146(16) and 73(1) do not apply following death?
CRA written response
The CRA continues to be of the view that a transfer under paragraph 146(16)(b) is not possible where the annuitant or the former common-law partner dies before the transfer referred to in this paragraph is completed.
Capital property transfer
Subsection 73(1) permits a tax deferral on the transfer of a capital property if the requirements of this subsection are met. In particular, any particular capital property of an individual (other than a trust) is required to be transferred in circumstances to which subsection 73(1.01) applies. According to the definition of trust in subsection 248(1), an estate is a trust. Accordingly, since Mr. died before having completed the transfer of the capital property, that transfer instead was effected by his estate, which is a trust and does not comply with the requirements of subsection 73(1).
Q.6 Meaning of “named” in QDT definition
Does a will designating the testator’s children or descendants as beneficiaries of the testamentary trust satisfy the “named as a beneficiary” requirement in the definition of qualified disability trust even though they are not designated by name?
CRA written response
To be a QDT as defined in subsection 122(3) for a taxation year, one of the conditions provided in paragraph (b) is that each of the beneficiaries who has elected under clause (a)(iii) (A) is an individual who is named as a beneficiary by the deceased individual, in the instrument under which the trust was created.
The term "named" in paragraph (b) of the definition of QDT in subsection 122(3) means a beneficiary who is identified by his or her name. This term refers to a beneficiary whose name is specifically stated in the deed under which the trust was created.
Consequently, a beneficiary who is part of a class of persons described in the instrument under which the testamentary trust has been established, such as children or descendants of the deceased individual, as well as a beneficiary who is unborn, would not be considered as a named beneficiary for the purposes of paragraph (b) of the definition of QDT in subsection 122(3).
Q.7 Imposition of s. 122(1)(c) QDT recovery tax following death of QDT beneficiary
A testator created a trust for the benefit of his mentally incapacitated son, with the trustees accorded the discretion to distribute income and encroach on capital. At the time of the beneficiary’s death, the trust holds a sum which it would be reasonable to consider had not become payable or been distributed out of the taxable income of the trust for a previous taxation year.
Question for Finance
What are the policy considerations respecting recovering tax on this amount under s. 122(1)(c) at the top marginal rate and the personal liability of the trustees if a final distribution were made following the death?
Finance written response
The rules regarding qualified disability trusts are measures to accommodate certain trust arrangements used to preserve the eligibility of disabled people to certain measures based on income, such as provincial social assistance programs. These accommodative measures aim to grant a tax advantage - by the taxation of the trust at progressive rates - only in circumstances where the disabled beneficiary benefits from after-tax income of the trust. In tax policy terms, the tax advantage conferred by such accommodative measures should not be granted where the beneficiary has not benefited from after-tax income of the trust and the amounts in the trust can be distributed to other taxpayers. The recovery tax under paragraph 122(1)(c) helps to achieve the objectives of the tax policy for the accommodative measures.
Questions for CRA
(a) If the balance of the taxable income of the trust for a taxation year prior to the year of death is paid to the estate of the disabled beneficiary in the year of his decease (as permitted under the trust deed), would s. 122(1)(c apply to retroactively impose tax at the high marginal rate?
(b) Would the trustee be personally liable for this tax?
(c) Would the estate of the handicapped beneficiary be liable for the recovery tax if the trust did not hold sufficient assets to satisfy the tax as a result of previous distributions made to the beneficiary?
CRA written response to Q.7(a)
Paragraph 122(2)(a) applies to a trust for a particular taxation year if the trust was a QDT for a preceding taxation year and none of the beneficiaries under the trust at the end of the particular year was an "electing beneficiary" of the trust for a preceding taxation year. The taxation year referred to in paragraph 122(2)(a) may be the year in which the electing beneficiary died or, if the QDT has various electing beneficiaries, the year in which the last of its electing beneficiaries died.
The CRA is of the view that the estate of a disabled beneficiary cannot qualify as an "electing beneficiary" for a particular taxation year. Indeed, paragraphs 118.3(1)(a) and (b) cannot apply to an estate, as required by the provisions of paragraph (b) of the definition of that expression in subsection 122(3) and by subparagraph (b)(i) of the definition of QDT in subsection 122(3).
In the example provided, paragraph 122(1)(c) applies since none of the beneficiaries under the trust at the end of the year of death was an electing beneficiary of the trust for a preceding taxation year, as required under paragraph 122(2)(a). Furthermore, a recovery tax is payable by the trust in the year of the death of the disabled beneficiary since the entire taxable income of the trust for the taxation years during which it was a QDT was not paid or distributed to an electing beneficiary.
It should be noted that the recovery tax does not apply in respect of a distribution or repayment of a capital contribution.
And to Q.7(b)
Generally, pursuant to subparagraph 159(1)(a)(i), the legal representative of a taxpayer is solidarily liable with the taxpayer to pay each amount payable under the Income Tax Act by the taxpayer to the extent that the legal representative is at that time in possession or control, in the capacity of legal representative, of property that belongs or belonged to, or that is or was held for the benefit of, the taxpayer.
Subsection 159(2) provides that, before distributing any property in the possession or control of a legal representative, the legal representative of a taxpayer must obtain a certificate certifying that all amounts for which the taxpayer is or can reasonably be expected to become liable under the Income Tax Act have been paid. This certificate must also confirm, as required, that all amounts for the payment of which the legal representative, in that capacity, is or can reasonably be expected to become liable, have been paid. Finally, if security for the payment of the such tax amounts has been accepted by the Minister, the certificate must certify as to such acceptance of this security.
If the legal representative proceeds with a distribution of property in his or her possession or control without obtaining a certificate under subsection 159(2), the legal representative could be personally liable for these amounts, up to the value of the property distributed. This rule is provided in subsection 159(3).
In the situation provided, the trustee of the QDT, in his or her capacity of legal representative as defined in subsection 248(1), is therefore subject to the above rules, and could be solidarily liable with the trust for the payment of the taxes imposed under paragraph 122(1)(c).
And to Q.7(c)
Under subsection 160(1), where a person is liable to pay tax under the Income Tax Act and the person transfers property, directly or indirectly, to a person with whom the person was not dealing at arm's length, the transferee and the transferor generally are solidarily liable to pay the amount by which the FMV of the transferred property exceeds the FMV at the time of the consideration given for the property, up to the amount of the tax liability of the transferor for the year of the transfer or for a preceding taxation year.
If, at the time of the transfer of the property to the estate by the trust, they were not dealing with each other at arm’s length within the meaning of subsection 251(1), it is possible that the rules in subsection 160(1) would apply. In the current situation, the information available to the CRA does not permit a conclusion as to the application of this provision.
Q.8 Carryback/carryforward of post-GRE gifts
The condition in s. (c)(ii)(B) of the “total charitable gifts” definition that the trust be a graduated rate estate (GRE) must be tested in the given year, i.e., that in which the gift is claimed rather than that of the gift. Accordingly, a deduction can be made during years 1, 2 or 3 of a GRE for gifts made in years 4 and 5 of an estate which would be a GRE but for the passage of 36 months.
(a) Does CRA agree that nothing in the Act prevents the test of a trust being a GRE for such purposes being applied in the year of deduction of the gift?
(b) If this is not the case, does this mean that the gift made in year 4 or 5 by an estate which would have been a GRE but for the passage of 36 months cannot benefit from the deduction in years 1, 2 or 3 of the GRE?
CRA written response to Q.8(a)
The CRA cannot confirm your interpretation of the rules in clause (c)(ii)(B) of the definition of "total charitable gifts" in subsection 118.1(1). For the purposes of clause (c)(ii)(B) of this definition, the trust must be a GRE at the time the gift is made, not in the year the gift is deducted in computing the tax payable.
And to Q.8(b)
In order for the eligible amount of a gift to be included in the "total charitable gifts" under proposed clause (c)(i)(C) or clause (c)(ii)(B) of the definition under subsection 118.1(1), it is necessary inter alia that subsection 118.1(5.1) apply to the gift.
Proposed subsection 118.1(5.1) applies to a gift following the death of a taxpayer by at most 60 months and that is made by a GRE or estate that would have been a GRE but for paragraph (a) of the definition of GRE in subsection 248(1) (a "Former GRE"). In addition, paragraph 118.1(5.1)(a) or (b) must apply.
Assuming that all conditions in the definition of "total charitable gifts" in proposed subsection 118.1(1) are satisfied, a gift made by a former GRE more than 36 months after the individual's death, but within 60 months after the death, can be claimed in the following years:
- the taxation year of the individual's death,20
- the taxation year preceding that of the individual's death,21
- the taxation year of the estate in which it made the gift,22
- one of the five taxation years of the estate following that in which the gift was made.23
However, the eligible amount of a gift cannot be included in the "total charitable gifts" of an estate for a preceding taxation year of the estate, namely, for years 1, 2 and 3 in your example.
20 Clause (c)(i)(C) of the definition of "total charitable gifts" in proposed subsection 118.1(1).
21 Clause (c)(i)(C) of the definition of "total charitable gifts" in proposed subsection 118.1(1).
22 Clause (c)(ii)(A) of the definition of "total charitable gifts" in subsection 118.1(1).
23 Clause (c)(ii)(A) of the definition of "total charitable gifts" in subsection 118.1(1).
Q.9 Corporate policy on multiple lives: s. 110.6(15)(a)
In 1999-0006485, CRA indicated that s. 110.6(15)(a) could apply where more than one individual’s life was insured under the corporate policy. However, the French version refers to “the” insured life.
A corporation is the owner of (and pays the premiums on) a policy providing for payment of the benefit on the death of the survivor of Mr X (its sole shareholder) and his spouse. The policy has an adjusted cost basis, cash surrender value, and fair market value of nil, $40,000 and $500,000, respectively.
(a) Does 1999-0006485 still apply?
(b) What would be the consequences if the referenced lives were of Mr X and a key employee and the policy provided for the payment of a death benefit on the death of each?
(c) Further to (b), would s. 110.6(15)(a) be satisfied if, on his death, Mr X was survived by the key employee?
CRA written response
The CRA continues to be of the view that the fact that there is more than one person whose life is insured under an insurance policy, which is the property of a particular corporation, is not by itself something that prevents the application of paragraph 110.6(15)(a).
Furthermore, the fact that the insured persons are not all shareholders of the given corporation is not usually a factor in determining whether paragraph 110.6(15)(a) applies to a shareholder of the corporation who is a person whose life is insured under an insurance policy which the corporation owns.
Q.10 FATCA exclusion for personal trusts
CRA considers that personal trusts used for estate planning purposes are exempted from FATCA disclosure requirements if they do not seek to raise external capital and are excluded by the Canadian financial institution definition.
Question for Finance
Has this exclusion been confirmed with the IRS and the U.S. Treasury Department?
As noted in the question, the CRA’s Guidance on enhanced financial accounts information reporting takes the view that personal trusts used for estate planning purposes that are not seeking to raise external capital are excluded from the reporting requirements for Canadian financial institutions. We can confirm that the US tax authorities were informed of this position in the course of the IGA negotiations; however, we cannot speak on behalf of the IRS or the US Treasury Department as to whether they have confirmed that position.
The government is of the view that the Canadian legislation in this regard is compatible with the "financial institution" definition in the IGA with the United States. Specifically, the IGA states that the definition of "investment entity" (a category of financial institutions) must be interpreted in a manner consistent with the similar wording of the definition of "financial institution" contained in the recommendations of the Financial Action Task Force. These recommendations have been implemented in Canada through the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, and the definition of "listed financial institution" in subsection 263(1) of the Income Tax Act is based on the relevant provisions of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.