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.
C. Tremblay (613) 957-2139
Dear Sirs:
Re: Subsection 148(8) of the Income Tax Act
This is in reply to your letter of July 23, 1987, in which you request information concerning a rollover under subsection 148(8) of the Income Tax Act (the Act). Specifically, you ask if the policyholder dies, can an interest of the policyholder in a life insurance policy be transferred for no consideration on a rollover basis by his estate to the spouse, child or grandchild assuming that the transferee is the life insured.
Our Comments
In the case of a non-exempt policy, it is our opinion that subsection 148(8) of the Act does not apply on death because the rules, dealing with the death of a holder of an interest in a policy found in paragraphs 148(2)(b) and 148(2)(c) of the Act, apply first. As a result of this timing, subsection 148(8) of the Act would not override these rules. The policyholder is deemed to have disposed of his interest in the policy pursuant to paragraph 148(2)(b) of the Act "immediately before the death".
In the case of an interest in an exempt policy passing on the death of the policyholder to his spouse, child or grandchild, subsection 148(7) of the Act is relevant. However, the rollover provision in subsection 148(8) is not applicable because the interest in the life insurance policy passes from the policyholder to his estate and then to his spouse, child or grandchild. To qualify for the rollover, the transfer must be direct as may occur with an inter vivos gift by the policyholder.
In conclusion, it is our opinion that subsection 148(8) of the Act applies to an "inter vivos" transfer only. We trust the above comments will be of assistance to you.
Yours truly,
for Director Small Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1987
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1987
Email this Content