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.
Principal Issues: Does the Income Tax Act dictate the methodology to be used by insurers in computing the allocations to be made to the holders of segregated fund policies?
Position: No
Reasons: Legislation
XXXXXXXXXX 2005-015695
November 3, 2005
Dear Sir:
We are writing to you in reply to your telephone inquiry regarding segregated funds issued by insurance companies.
We can confirm for you that there are no provisions in the Canadian Income Tax Act, that dictate the methodology to be used by the issuers of segregated fund policies in computing the allocations to be made to the holders of segregated fund policies. Individual holders of segregated fund policies are generally taxable on the amount that has been allocated to them in the year, in respect of their individual interest in the respective segregated fund trust. It is the terms and conditions of the segregated fund policy that would normally determine the method and timing of the allocation.
We trust that the above comments are of assistance to you.
Yours truly,
For/F. Lee Workman
Manager
Charitable and Financial Institution Sectors Section
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Policy and Planning Branch
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