CRA confirms that s. 148(7)(a) trumps s. 69(1)(b) and 52(2), but not s. 69(5)

CRA considers that proposed s. 148(7)(a) will prevail over s. 69(1)(b). Accordingly, where an individual makes a non-arm’s length transfer of a insurance policy for nil proceeds, the proceeds of disposition generally will be the greater of the cash surrender value and the adjusted cost basis of the policy, and the fair market value proceeds will not be deemed to be received under s. 69(1)(b).

CRA also confirmed two earlier positions that s. 69(5) (respecting a s. 88(2) wind-up) prevailed over s. 148(7), but that s. 148(7) prevailed over the more general rule in s. 52(2) (respecting dividends in kind).

Neal Armstrong. Summary of 7 October 2016 APFF Financial Strategies and Instruments Roundtable, Q.3 under s. 148(7)(a).