CRA does not provide any accommodations for the technical impossibility of demonstrating that a life insurance policy issued abroad is exempt
Annual income accrual is required on life insurance policies that are not exempt policies. It is unlikely that testing for compliance with Reg. 306(1) will be routinely performed by the insurer for policies issued outside of Canada where the policyholder is resident in, or immigrates to, Canada. Where the policy is not issued in Canadian currency, there could be failure under the exempt test simply as a result of FX fluctuations. What is such a Canadian taxpayer to do?
Given that the information to determine the exempt status of a particular life insurance policy is only available in the accounts of the insurer, the onus is on the policyholder to establish that the policy qualifies as an exempt policy.
Summary of 14 May 2019 CLHIA Roundtable Q. 6, 2019-0799101C6 under Reg. 306(1).