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.
- 5- 9475 M.M. Trotier (613) 957-8957
Attention:
May 30, 1990
This is in reply to your letter of January 23, 1990 requesting a technical interpretation concerning the expression "line of business" referred to in subsection 138(11.92) of the Income Tax Act ("Act"). You have asked that we provide you with the criteria which we feel are required to determine what constitutes a "line of business" and also what distinguishes a "line of business of an insurance business" from an "insurance business".
The Canadian and British Insurance Companies Act ("CABICA") defines the "business of insurance" to mean "the making of any contract of insurance, and includes any act or acts of inducement to enter into such a contract, and any act or acts relating to the performance thereof, or the rendering of any service in connection therewith". CABICA distinguishes between a company which is registered to transact the business of other than life insurance. The Income Tax Act also distinguishes between an insurer which carries on a life insurance business and one which carries on an other than a life insurance business. Generally we would expect that life insurance and other than life insurance each constitute an insurance business on its own right and the reference to an "insurance business" in subsection 138(11.92) of the Act would therefore refer to the life and/or the non-life insurance business of an insurer.
Whether or not a particular segment of the business is a "line of business" can only be determined with consideration to all of the facts of the particular situation. We can, however, provide you with our general comments with regard to what may constitute a "line of business".
Some guidance can be obtained from the Classes of Insurance Regulations of the Canadian and British Insurance Companies Act and the Foreign Insurance Companies Act. In this regard we note that no reference is made to lines of business but that reference is made to classes of business. Accordingly, subject to the facts of a specific case, it seems to us appropriate to view as a line of business for purposes of subsection 138(11.92) of the Act, in the case of a property and casualty insurer, the individual classes of insurance which are enumerated in the Classes of Insurance Regulations referred to above, and, in the case of a life insurer, the classes of business referred to within CABICA. We trust that the above comments will be of assistance.
Yours truly,
F. Lee Workman
Financial Industries Division
Rulings Directorate
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