For the first nine years of a critical illness policy on the life of one of its shareholders, the corporation has been paying the premiums on the policy. As a result of the payment of an additional premium, the policyholder (the corporation) is entitled to a return of premiums on the policy maturity after 10 years. In the 10th year, the corporation assigns the insurance policy without consideration to the shareholder, who pays the premium due for the 10th year and then receives a full refund of all premiums paid during the term of the policy.
After indicating that this transfer generated a s. 15(1) benefit equaling the FMV of the policy, CCRA stated:
In determining the fair market value of such a policy, we are of the view that the age and health of the insured, the amount of refundable premiums and the amount of premiums paid at the date of transfer will be among the factors to consider.