CRA finds that s. 148(10)(d) (deeming exercise of rights not to be dispositions) does not apply to the exercise of a right to split an insurance policy

S. 148(10)(d) provides that a “policyholder shall be deemed not to have disposed of… an interest in a life insurance policy…as a result only of the exercise of any provision (other than a conversion into an annuity contract) of the policy.” CRA considers that s. 148(10)(d) does not apply to the exercise by a policyholder of a contractual right to split a universal life insurance policy covering two lives into two policies, stating that as “the Act does not contemplate the splitting of a multiple life insurance policy into separate policies…the objective of introducing paragraph 148(10)(d)… was not to provide for a non-disposition of the policy in these circumstances.”

CRA also indicated that whether there was a disposition on general principles (before looking at s. 148(10)(d)) turned on whether “the changes that are made to the terms of the policy…are so fundamental as to go to the root of the policy.”

Neal Armstrong. Summary of 17 February 2016 T.I. 2015-0608261E5 under s. 148(10)(d).