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:
Must a life insurance company issue a T5 slip in respect of an annuity contract issued by the life insurer and owned by a property and casualty insurer who acquired the contract to create a structured settlement?
Position:
Yes, a T5 must be prepared with respect to income accruing pursuant to subsection 12.2(1) of the Act and to be included in computing the income of the property and casualty insurer.
Reasons: Subsection 201(5) of the Income Tax Regulations.
XXXXXXXXXX 2003-004352
R. Maley
December 15, 2003
Dear XXXXXXXXXX:
Re: T5 Reporting Requirement with respect to Annuity
This is in response to your letter of October 10, 2003 respecting the reporting requirements of a life insurer in respect of income accrued pursuant to section 12.2 of the Income Tax Act ("the Act") in respect of an annuity contract issued by the life insurer and owned by a property and casualty insurer who acquired the contract to create a structured settlement. A "structured settlement" in this respect, is defined in section 5 of the Canada Customs and Revenue Agency ("CCRA") Interpretation Bulletin IT-365R2, "Damages, Settlements and Similar Receipts".
We confirm that subsection 201(5) of the Income Tax Regulations requires every insurer (within the meaning assigned by paragraph 148(10)(a) of the Act) who is a party to an annuity contract in respect of which an amount is to be included in computing a taxpayer's income pursuant to subsection 12.2(1) to make an information return in prescribed form in respect of that amount. The prescribed form is the T5. In this respect, we would refer you to the instructions pertaining to Box 19 of the T5 in Chapter 4 of the CCRA "T5 Guide - Return on Investment Income" ("the T5 Guide").
We would also confirm that the references to "investment contracts" in Chapter 4 of the T5 Guide pertain to investment contracts as defined in subsection 12(11) of the Act and not to annuity contracts subject to income accrual pursuant to section 12.2 of the Act.
Yours truly,
F. Lee Workman
Manager
Financial Institutions Section
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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