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.
Document No.: E 2001-0072815
Author: SARAZMI
Reference Date: May 8, 2001
Subject: CALU CONFERENCE - 2001
Section Ref.: 248(1)
Principal Issues: Will a life insurance policy owned by an RCA trust be exempted under paragraph (e) of the definition of taxable life insurance policy in subsection 211(1) of the Act?
Position TAKEN: No.
Reasons: A life insurance policy owned by an RCA trust is not a policy that is at that time a retirement compensation arrangement
CALU - Conference for Advanced Life Underwriting (2001)
CALU - Conference for Advanced Life Underwriting (2001)
Question 5
Investment Income Tax and RCA's
A special 15% tax under Part XII.3 is payable by life insurers on investment income earned in respect of their taxable life insurance policies. Under paragraph (e) of the definition of "taxable life insurance policy" in subsection 211(1), a life insurance policy that is at that time an RCA is excluded from being considered a taxable life insurance policy for the purposes of Part XII.3.
Will a life insurance policy owned by an RCA trust be exempted from being considered a taxable life insurance policy under paragraph (e) of the definition of "taxable life insurance policy" in subsection 211(1)?
Agency's Response
A life insurance policy owned by an RCA trust is simply property or an investment of the trust, and is not an RCA for purposes of the Act. Thus, the policy will not be excluded from the definition of "taxable life insurance policy" in subsection 211(1).
What is excluded under paragraph (e) is a life insurance policy that is a deemed RCA pursuant to subsection 207.6(2), as discussed in the previous question.
Prepared by: Mickey Sarazin
Section 43
May 1, 2001
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