10 January 1997 Internal T.I. 9641467 - PROPERTY OF A NON-RESIDENT INSURER

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:

Whether the reference to property in paragraph 810(1)(a) of the Regulations refers to any property of a qualified insurance corporation or to property which is PUBI.

Position:

The reference is to any property.

Reasons:

The legislation does not provide for any restriction.

			January 10, 1997

	MONTREAL TAX SERVICES OFFICE	HEADQUARTERS
J. Portulese	Michèle Trotier
	International Section	(613) 957-3494
	Section 443-2-1, 3rd Floor
			964146

Section 116 of the Income Tax Act ("Act")

This is a follow up to our opinion letters dated January 26, 1993 (930046) and December 22, 1992 (923334) concerning the application of section 116 of the Act and section 810 of the Income Tax Regulations ("Regulations") with regard to the disposition of taxable Canadian property by a non-resident insurer. At issue was the interpretation of the reference to "property" of a non-resident insurer that is a qualified insurance corporation in paragraph 810(1)(a) of the Regulations for the purposes of the definition of "excluded property" in paragraph 116(6)(e) of the Act. A qualified insurance corporation is defined in subsection 810(2) of the Regulations.

Pursuant to paragraph 116(6)(e) of the Act "excluded property" includes prescribed property which is described in paragraph 810(1)(a) of the Regulations as including "property of a non-resident insurer that is a qualified insurance corporation". We have previously opined, with respect to the disposition of shares of another insurer held by a non-resident insurer that is a qualified insurance corporation, that the property referred to in paragraph 810(1)(a) of the Regulations would be "property used by it in the year in, or held by it in the year in the course of" carrying on an insurance business in Canada (referred to as "PUBI" as defined in subsection 138(12) of the Act) even though we recognized that this paragraph does not contain a specific qualification to the effect that the property must be PUBI. It was our understanding that this position reflected the intention of the legislator when this measure was enacted.

We recently had further discussions with officials at the Department of Finance and after further consideration it is their view that the intention of the legislator was not to restrict the application of paragraph 810(1)(a) of the Regulations to PUBI of the non-resident insurer that is a qualified insurance corporation. Accordingly recognizing that our arguments for restricting the scope of paragraph 810(1)(a) of the Regulations to PUBI are somewhat tenuous given the current view of the Department of Finance we are no longer maintaining our previous position.

F. Lee Workman
Section Chief
Financial Institutions Section
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch