A corporation transfers a policy on the life of an arm’s length shareholder for consideration equal to the policy’s fair market value, which exceeds its cash surrender value. In finding that s. 148(7) would not apply, CCRA stated:
The transfer by a corporation of a life insurance policy to a shareholder or employee who deals at arm's length with the transferor for proceeds equal to the fair market value of the policy is not a "distribution" for purposes of subsection 148(7).