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: Whether an inclusion under paragraph 56(1)(j) may be properly considered to be income from a source that is a property for the purposes of the definition of aggregate investment income in subsection 129(4)?
Position: Yes.
Reasons: The law.
CALU - Conference for Advance Life Underwriting (2006)
Question 5
RDTOH and Income from Disposition of Life Insurance Policy
Where a corporation disposes of an interest in a life insurance policy, the corporation is required by paragraph 56(1)(j) to include in its income the amount, if any, determined under subsection 148(1) or (1.1) in respect of the disposition. It is unclear whether, for purposes of the definition of "aggregate investment income" in subsection 129(4), such an amount is income of the corporation from a source that is property.
Question:
Does the CRA agree that an amount included in the income of a corporation by reason of paragraph 56(1)(j) is also included in determining the corporation's aggregate investment income?
Agency's Response
At issue is whether an amount that is included in a corporation's income under paragraph 56(1)(j) in respect of the disposition of an interest in a life insurance policy is considered income from a source that is property for the purposes of paragraph (b) of the definition of "aggregate investment income" in subsection 129(4).
It is our view that where an amount in respect of a disposition of a corporate owned life insurance policy is included in the corporation's income pursuant to paragraph 56(1)(j) such amount may reasonably be considered as being income from a source that is a property for purposes of paragraph (b) of the definition of "aggregate investment income" in subsection 129(4).
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