Principal Issues: Whether a policyholder is required to file Form T2210 with the Minister by the date prescribed under Regulation 4001 for the purposes of subsection 20(2.1) of the Act.
Position: No.
Reasons: The Act does not require that a completed Form T2210 be filed with the Minister by the date prescribed under Regulation 4001. However, copies of the completed form should be maintained by the policyholder and insurer in accordance with Section 230, and subject to request for review by the Canada Revenue Agency pursuant to Section 231.2.
2009-032242 XXXXXXXXXX Robert Demeter, CGA (613) 952-1505 Attention: XXXXXXXXXX
October 13, 2009
Dear XXXXXXXXXX :
Re: Form T2210 Filing Requirements
This is in reply to your letter of May 11, 2009, in which you requested clarification of the filing responsibilities imposed upon a taxpayer in compliance with subsection 20(2.1) of the Income Tax Act (hereafter, the "Act") and Regulation 4001 of the Income Tax Regulations. We also acknowledge the information provided during your telephone conversation (XXXXXXXXXX /Young) in connection with your request.
Where applicable, subsection 20(2.1) of the Act may apply to limit the deduction available pursuant to paragraphs 20(1)(c) and (d) of the Act in respect of interest on certain policy loans, except to the extent that the amount of the interest is "verified by the insurer" as interest paid in the year on that loan, and as interest that was not otherwise added to the adjusted cost basis to the taxpayer of the taxpayer's interest in the underlying policy.
Further to comments originally provided in our Document 2004-0058631M4(E), Form T2210 is prescribed for use by a taxpayer for the purposes of the verification required under subsection 20(2.1) of the Act. Where applicable, this form is to be jointly completed by the policyholder who is making the claim and the insurer. For the purposes of subsection 20(2.1) of the Act, Regulation 4001 requires that Form T2210 be provided to the insurer for their verification and completion on or before the date that the policyholder's income tax return is due in respect of the taxation year in which the policy loan interest was paid.
Although the Act does not require that a completed Form T2210 be filed with the Minister by the date prescribed under Regulation 4001, copies of the form should be maintained by the policyholder and insurer in accordance with Section 230 of the Act, and subject to a possible review by the Canada Revenue Agency upon request.
We trust that our comments will be of assistance to you.
Yours truly,
Terry Young, C.A.
A/ Manager
for Division Director
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Policy and Legislation Branch