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.
Principal Issues: The requirement under clause 304(1)(c)(iv)(D) of the Regs to the ITA preclude the collateral assign. of a prescribed annuity contract security for a loan?
Position: See Q&A
Reasons: See Q&A
CALU - Conference for Advanced Life Underwriting (2008)
Question 10
Collateral Assignment of Annuity Contract
Where an annuity contract is intended to qualify as a prescribed annuity contract it must comply with the requirements of Regulation 304(1). Clause 304(1)(c )(iv)(D) of the Regulations requires that the holder's rights under the contract not be disposed of otherwise than on the holder's death. Does this requirement preclude the collateral assignment of a prescribed annuity contract as security for a loan?
Agency's Response:
Provided that the assignee is unable to force any disposition of the policy by the holder, but has only a right to the annuity payments that continue to be constructively received by the holder, in our view, the collateral assignment of an annuity contract does not affect the requirement under clause 304(1)(c )(iv)(D) of the Regulations that the holder's rights under the contract not be disposed of otherwise than on the holder's death.
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