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.
DATE July 29, 1988
To Special Audits Division E.H. Gauthier Director
FROM Financial Industries Division M.J. Loveday 957-8961
SUBJECT: Ideal Mutual Insurance Company
Authority of Agents for Liquidation
We are writing in response to your memorandum of June 15, 1988 concerning a situation encountered by R.T. Kenning of the Scarborough District Office.
XXXX
Subparagraph 1400 (e)(ii) of the Regulations provides that a claims reserve cannot exceed the amount reported in the annual report to "the relevant authority". The "relevant authority" is defined for purposes of that reserve under subsection 1404(2) of the Regulations as meaning the Superintendent (or where the insurer is not required to report to him - it refers to the provincial superintendent). Thus the Income Tax Act itself confers the status "relevant authority" on the Superintendent. Neither the Foreign Insurance Companies Act nor The Winding-Up Act contains any reference to a liquidator having any authority to approve tax reserves or to act as "the relevant authority" for purposes of the Income Tax Act. Thus appointing someone to act as agent in carrying out the winding-up of the business should not result in any agency being established with respect to the rights or obligations of "the relevant authority".
It appears that the Superintendent would not have the right to appoint an agent to act as relevant authority. The fifteenth edition of "Bowstead on Agency" (1985, page 36) contains the following proposition concerning the common law of agency in the United Kingdom
ACTS WHICH MAY BE DONE BY MEANS OF AN AGENT
An agent may be appointed for the purpose of executing any deed, or doing any other act on behalf of the principal, which the principal might himself execute, make or do; except for the purpose of executing a right, privilege or power conferred, or of performing a duty imposed, on the principal personally, the exercise or performance of which requires discretion or special personal skill, or for the purpose of doing an act which the principal is required, by or pursuant to any statute, to do in person.
This principal should be equally valid in Canada. Thus it would seem that the Superintendent could not delegate to anyone else his authority granted under the Income Tax Act as the "relevant authority".
XXXX
F.L. Workman Chief Financial Institutions Section Financial Industries Division Rulings Directorate
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