VIII, s. 87(3)]
(a)the proceeds of the disposition, if any, in respect of the loan,(b)if the policy is issued after 2016 (and, in the case where the particular time at which the policy is issued is determined under subsection (11), the repayment is at or after the particular time), the portion of the loan applied, immediately after the loan, to pay a premium under the policy as provided for under the terms and conditions of the policy (except to the extent that the portion is described in subparagraph (i) of the description of C in paragraph (a) of the definitionproceeds of the dispositionin this subsection), and(c)the amount, if any, described in the description of J in this definition (but not including any payment of interest) in respect of the loan, and
(a)in the case of an interest in a life insurance policy (other than an annuity contract) that was last acquired after December 1, 1982 by the policyholder, the total of all amounts each of which is the net cost of pure insurance, as defined by regulation and determined by the issuer of the policy in accordance with the regulations, in respect of the interest immediately before the end of the calendar year ending in a taxation year commencing after May 31, 1985 and before that time,(b)in the case of an interest in an annuity contract to which subsection 12.2(1) applies for the taxation year that includes that time (or would apply if the contract had an anniversary day in the year and while the taxpayer held the interest), the total of all annuity payments paid in respect of the interest before that time and while the policyholder held the interest, or(c)in the case of an interest in a contract referred to in the description of G, the total of all amounts each of which is a mortality loss, as defined by regulation and determined by the issuer of the contract in accordance with the regulations, in respect of the interest before that time,
(a)is a benefit on death (as defined in subsection 1401(3) of theIncome Tax Regulations), or a disability benefit, under the policy, and(b)does not result in the termination of a coverage (as defined in subsection 1401(3) of theIncome Tax Regulations) under the policy,
(a)a surrender thereof,(b)a policy loan made after March 31, 1978,(c)the dissolution of that interest by virtue of the maturity of the policy,(d)a disposition of that interest by operation of law only, and(e)the payment by an insurer of an amount (other than an annuity payment, a policy loan or a policy dividend) in respect of a policy (other than a policy described in paragraph 148(1)(a), 148(1)(b), 148(1)(c), 148(1)(d) or 148(1)(e)) that is a life annuity contract, as defined by regulation, entered into after November 16, 1978, and before November 13, 1981,
(f)an assignment of all or any part of an interest in the policy for the purpose of securing a debt or a loan other than a policy loan,(g)a lapse of the policy in consequence of the premiums under the policy remaining unpaid, if the policy was reinstated not later than 60 days after the end of the calendar year in which the lapse occurred,(h)a payment under a policy as a disability benefit or as an accidental death benefit,(i)an annuity payment,(j)a payment under a life insurance policy (other than an annuity contract) that(i)was last acquired before December 2, 1982, or(ii)is an exempt policyin consequence of the death of any person whose life was insured under the policy, or(k)any transaction or event by which an individual becomes entitled to receive, under the terms of an exempt policy, all of the proceeds (including or excluding policy dividends) payable under the policy in the form of an annuity contract or annuity payments, if, at the time of the transaction or event, the individual whose life is insured under the policy was totally and permanently disabled; (disposition)
(i)was last acquired before December 2, 1982, or(ii)is an exempt policy
(a)interest paid after 1977 to a life insurer in respect of a policy loan, other than interest deductible in the 1978 or any subsequent taxation year pursuant to paragraph 20(1)(c) or 20(1)(d), and(b)a prepaid premium under the policy to the extent that it cannot be refunded otherwise than on termination or cancellation of the policy,
(c)the portion of any amount paid under the policy with respect to an accidental death benefit, a disability benefit, an additional risk as a result of insuring a substandard life, an additional risk in respect of the conversion of a term policy into another policy after the end of the year, an additional risk under a settlement option, or an additional risk under a guaranteed insurability benefit, if(i)in the case of an annuity contract, a policy issued before 2017 or in respect of which the particular time at which the policy is issued is determined under subsection (11), where the interest in the policy was last acquired after December 1, 1982, the payment is made after May 31, 1985 and, if the particular time at which the policy is issued is determined under subsection (11), before the particular time, or(ii)in the case where the taxpayer’s interest in the policy was last acquired before December 2, 1982,(A)subsection 12.2(9) of theIncome Tax Act, chapter 148 of theRevised Statutes of Canada, 1952, applies to the interest,(B)the particular time at which the policy is issued is determined under subsection (11), and(C)the payment is made in the period that starts at the later of May 31, 1985 and the first time at which that subsection 12.2(9) applies in respect of the interest and that ends at the particular time; (prime)
(i)in the case of an annuity contract, a policy issued before 2017 or in respect of which the particular time at which the policy is issued is determined under subsection (11), where the interest in the policy was last acquired after December 1, 1982, the payment is made after May 31, 1985 and, if the particular time at which the policy is issued is determined under subsection (11), before the particular time, or(ii)in the case where the taxpayer’s interest in the policy was last acquired before December 2, 1982,(A)subsection 12.2(9) of theIncome Tax Act, chapter 148 of theRevised Statutes of Canada, 1952, applies to the interest,(B)the particular time at which the policy is issued is determined under subsection (11), and(C)the payment is made in the period that starts at the later of May 31, 1985 and the first time at which that subsection 12.2(9) applies in respect of the interest and that ends at the particular time; (prime)
(A)subsection 12.2(9) of theIncome Tax Act, chapter 148 of theRevised Statutes of Canada, 1952, applies to the interest,(B)the particular time at which the policy is issued is determined under subsection (11), and(C)the payment is made in the period that starts at the later of May 31, 1985 and the first time at which that subsection 12.2(9) applies in respect of the interest and that ends at the particular time; (prime)
(a)in respect of a surrender or maturity thereof, means the amount determined by the formula(A - B) - CwhereAis the cash surrender value of the interest in the policy at the time of surrender or maturity,Bis that portion of the cash surrender value represented by A that is applicable to the policyholder’s interest in the related segregated fund trust as referred to in paragraph 138.1(1)(e), andCis the total of amounts each of which is(i)an amount by which the amount payable in respect of a policy loan in respect of the policy is reduced as a consequence of the disposition, except that if the policy is issued after 2016 and the disposition is of a part of the interest (and, in the case where the particular time at which the policy is issued is determined under subsection (11), the disposition occurs at or after the particular time), only to the extent that the amount represents the portion of the loan applied, immediately after the loan, to pay a premium under the policy, as provided for under the terms and conditions of the policy,(ii)a premium under the policy that is due but unpaid at that time, or(iii)an amount applied, immediately after the time of the surrender, to pay a premium under the policy, as provided for under the terms and conditions of the policy,(b)in respect of a policy loan made after March 31, 1978 means the lesser of(i)the amount of the loan, other than the part thereof applied, immediately after the loan, to pay a premium under the policy, as provided for under the terms and conditions of the policy, and(ii)the amount, if any, by which the cash surrender value of the policy immediately before the loan was made exceeds the total of the balances outstanding at that time of any policy loans in respect of the policy,(c)in respect of a payment described in paragraph (e) of the definitiondispositionin this subsection, means the amount of that payment, and(d)in respect of a disposition deemed to have occurred under paragraph 148(2)(b), means the accumulating fund in respect of the interest, as determined in prescribed manner,(i)immediately before the time of death in respect of a life insurance policy (other than an annuity contract) last acquired after December 1, 1982, or(ii)immediately after the time of death in respect of an annuity contract; (produit de disposition)
(i)an amount by which the amount payable in respect of a policy loan in respect of the policy is reduced as a consequence of the disposition, except that if the policy is issued after 2016 and the disposition is of a part of the interest (and, in the case where the particular time at which the policy is issued is determined under subsection (11), the disposition occurs at or after the particular time), only to the extent that the amount represents the portion of the loan applied, immediately after the loan, to pay a premium under the policy, as provided for under the terms and conditions of the policy,(ii)a premium under the policy that is due but unpaid at that time, or(iii)an amount applied, immediately after the time of the surrender, to pay a premium under the policy, as provided for under the terms and conditions of the policy,
(i)the amount of the loan, other than the part thereof applied, immediately after the loan, to pay a premium under the policy, as provided for under the terms and conditions of the policy, and(ii)the amount, if any, by which the cash surrender value of the policy immediately before the loan was made exceeds the total of the balances outstanding at that time of any policy loans in respect of the policy,
(i)immediately before the time of death in respect of a life insurance policy (other than an annuity contract) last acquired after December 1, 1982, or(ii)immediately after the time of death in respect of an annuity contract; (produit de disposition)
(a)where the interest includes an interest in the cash surrender value of the policy, the amount in respect thereof that the holder of the interest would be entitled to receive if the policy were surrendered at that time, and(b)in any other case, nil. (valeur)
(a)a reference to “insurer” or “life insurer” shall be deemed to include a reference to a person who is licensed or otherwise authorized under a law of Canada or a province to issue contracts that are annuity contracts;(b)a reference to a “person whose life was insured” shall be deemed to include a reference to an annuitant under a life annuity contract, as defined by regulation, entered into before November 17, 1978;(c)where a policyholder is a person who has held an interest in a life insurance policy continuously since its issue date, the interest shall be deemed to have been acquired on the later of the date on which(i)the policy came into force, and(ii)the application in respect of the policy signed by the policyholder was filed with the insurer;(d)except as otherwise provided, a policyholder shall be deemed not to have disposed of or acquired an interest in a life insurance policy (other than an annuity contract) as a result only of the exercise of any provision (other than a conversion into an annuity contract) of the policy; and(e)where an interest in a life insurance policy (other than an annuity contract) last acquired before December 2, 1982 to which subsection 12.2(9) of theIncome Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, does not apply has been acquired by a taxpayer from a person with whom the taxpayer was not dealing at arm’s length, the interest shall be deemed to have been last acquired by the taxpayer before December 2, 1982.
(i)the policy came into force, and(ii)the application in respect of the policy signed by the policyholder was filed with the insurer;
(a)if the insurance is term insurance, converted to permanent life insurance within the policy; or(b)if the insurance (other than insurance paid for with policy dividends or that is reinstated) is medically underwritten after 2016 (other than to obtain a reduction in the premium or cost of insurance rates under the policy), added to the policy.
[NOTE: Application provisions are not included in the consolidated textsee relevant amending Acts and regulations.]R.S., 1985, c. 1 (5th Supp.), s. 1481994, c. 7, Sch