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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: Whether or not a particular annuity contract is a life annuity contract as defined in section 301 of the Income Tax Regulations
Position: No
Reasons: Wording of section 301 of the Income Tax Regulations
CALU - Conference for Advanced Life Underwriting May 7, 2002
Question 4
Life annuity contracts
There are situations where an annuity may be payable throughout the lifetime of an individual but that individual is not the recipient of the annuity payments. The individual may be an employee or a shareholder of a corporation and the corporation is the purchaser and owner of the annuity contract and also the recipient of the annuity payments. Such an annuity contract is not a prescribed annuity contract and as such is subject to the accrual rules pursuant to section 12.2.
Is this annuity contract a "life annuity contract" pursuant to section 301 of the Income Tax Regulations?
Agency's Response
Such an annuity contract is not a "life annuity contract" pursuant to section 301 of the Income Tax Regulations since it does not meet the requirements of that provision.
The definition of a "life annuity contract" within the meaning of section 301 of the Income Tax Regulations stipulates among other things that the annuity payments are to be made to an individual who is referred to as the "annuitant" and such annuity payments are to continue throughout the lifetime of the annuitant. In the above situation the annuity payments are made to a corporation and not to an individual as required by section 301 of the Regulations.
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