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: Split dollar arrangements using universal life insurance products. Clarification of comments in 990052.
Position: We are not prejudging whether a split dollar arrangement can be effected with a universal life insurance policy.
Reasons: Determination of taxable benefit, if any, can only be made after a review of the relevant facts etc.
XXXXXXXXXX 2000-003673
Attention: XXXXXXXXXX
July 20, 2000
Dear Sirs:
This letter is in follow-up to our telephone conservation (XXXXXXXXXX/Workman) concerning the use of universal insurance products to effect "split dollar" arrangements.
Your primary concern is with respect to certain comments made in our letter dated April 7, 1999 (our reference 990052) which suggest that it is the view of the Canada Custom & Revenue Agency that it is not possible to structure a "split dollar" arrangement using a universal life insurance product. This is not the case and in this regard I would point out that in our April 7, 1999 letter we indicated that the determination of a taxable benefit under a "split dollar" arrangement utilizing a universal life insurance product can only be made on a case by case basis after a review of the relevant facts.
You have also suggested that some of the general comments expressed with regard to universal policies in our April 7, 1999 would not be correct in some cases. We do not take exception with your observation but rather it would seem to reinforce our concern that given the flexibility of these products and arrangements that it is inappropriate for us to attempt to provide general comments.
Should you wish to pursue and advance income tax ruling with respect to a specific proposed "split dollar" arrangement we would be prepared to consider it.
We hope that our comments are of assistance to you.
Yours truly,
F. Lee Workman
Manager
Financial Industries
Income Tax Rulings Directorate
Policy and Legislation Branch
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