18 July 1990 Internal T.I. ACC9419 F - Tax Calculation for Canadian-controlled Private Insurance Corporation

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.

Subject: Tax Calculation for a Canadian-Controlled Private Insurance Corporation

This is in response to your correspondence of July 11, 1990 wherein you requested our opinion regarding the interpretation of subsection 123(1) and section 123.2 of the Income Tax Act (the "Act") as those provisions affect a Canadian-controlled private corporation that is a general insurance corporation in respect of its 1988 taxation year.

As you noted, section 141.1 of the Act deems an insurance corporation, other than a life insurance corporation, not to be a private corporation for the purposes of, inter alia, section 129 of the Act.

Accordingly, it is our opinion that, in the calculation of Part I tax pursuant to paragraph 123(1)(a) of the Act as applicable to taxation years ending after June 1987 and commencing before July 1988, the amount determined pursuant to clause (iv)(B) and subparagraph (vi) by reference to clause 129(3)(a)(i)(B) is nil with respect to this particular corporation.  A similar result will be obtained in paragraph 123.2(b) regarding the corporation surtax.

Insofar as these adjustments to the Part I tax payable and the corporation surtax are only with reference to those corporations eligible to claim a dividend refund pursuant to section 129 of the Act, it is appropriate that the above-noted adjustments do not apply to this particular corporation.

We trust that our comments are of assistance to you.

R.J.L. ReadActing Assistant Deputy MinisterLegislative and Intergovernmental Affairs Branch