10 May 1995 External T.I. 9506335 - PAYMENTS RE SEGEREGATED FUND POLICY

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Payments by a life insurer pursuant to a segregated fund policy

Position TAKEN:

Deductible by the insurer under section 9 and 138(1)(d)

Reasons FOR POSITION TAKEN:

Clear reading of the Act

		950633
XXXXXXXXXX	J.P. Dunn

Attention: XXXXXXXXXX

May 10, 1995

Dear Sirs:

Re: Paragraph 1401(1)(d) of the Income Tax Regulations

We are writing in response to your correspondence of December 21, 1994 wherein you had requested the Department's opinion regarding certain payments made by a life insurer to a policyholder pursuant to a guarantee provided in respect of a segregated fund policy. We also acknowledge the telephone conversation between XXXXXXXXXX and Ms. Trotier of this office during which the exact nature of your query was clarified. Also, we apologize for the delay in our response.

Generally, in circumstances in which the payment is made pursuant to a "guarantee in respect of a segregated fund policy", referred to in paragraph 1401(1)(d) of the Income Tax Regulations, that payment would be deductible by the insurer under section 9 of the Income Tax Act ("Act") as provided for in paragraph 138(1)(d) of the Act.

We trust that this is the information which you require and that our comments will be of assistance to you.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch