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5 October 2018 APFF Financial Strategies and Instruments Roundtable Q. 1, 2018-0761521C6 F- Life insurance policy as share redempt. proceeds Unedited CRA Tags 148(7), 55(2) Principales Questions: Whether a shareholder receiving an interest in a life insurance policy from a corporation as redemption proceeds for preferred shares the shareholder previously owned in the corporation should be considered as having given consideration for the interest in the life insurance policy? ...

Accounts receivable are considered in the purchase price of the shares, but the amount paid at the closing is reduced by the amount of the accounts receivable. ...

Consequently, in the situation above, the amount of the dividend for the purposes of the ITA would generally be considered to be $1 even though these shares have a redemption price of $100,000. ...

In other words, can an amount held in cash flow for just one day be considered a non-operating asset, not used primarily in an active business? ...

The purpose of the exempt test policy rules is to place limitations on the investment growth in a policy and thereby restrict tax deferral to policies considered to have insurance protection as their main purpose. ...

The Courts have considered the interpretation of the term "used" and in particular whether used means first used or currently used. ...

Response The issue that we are revisiting with respect to partnerships and treaties is whether Canada should continue to give treaty benefits to partners resident in a treaty country (for purposes of the applicable treaty), where the partnership is formed in Canada and is transparent for Canadian tax purposes, but is considered to be a foreign corporation for purposes of the treaty country's tax system and the partners are not actually taxable on the partnership income in the treaty country. ...

However, we are of the view that a portion of each rent payment could be considered a payment on the right to purchase the property in the future. ...

Generally speaking, when 90 percent of the assets of the business carried on in Canada are sold, all or substantially all of the assets of the business will be considered as having been sold. ...

When such an election is made, the lessee is considered to have purchased the leased property and to have financed this purchase by a loan. ...