5-901788
Dear Sir:
This is in reply to your letter dated July 25, 1990 with respect to proceeds received from a group term life insurance policy. We apologize for the delay in replying.
We agree that monthly payments received by a beneficiary pursuant to a group term life insurance policy would not be included in the deceased policyholder's proceeds of disposition for purposes of subsection 148(1) of the Income Tax Act (the "Act"). As the definition of "annuity" in subsection 248(1) of the Act includes an amount payable on a periodic basis whether payable under a contract, will, trust or otherwise, it would seem that the monthly payments to be received by the beneficiary would constitute annuity payments whether or not the beneficiary acquires an interest in an annuity contract.
Accordingly, it is our view that in the general situation described above that the annuity payments received by the beneficiary would be included in income to the extent provided for under paragraph 56(1)(d) or subsection 12.2 of the Act.
While we hope our comments are of assistance to you they do not constitute an advance income tax ruling and therefore are not binding on the Department in respect of a specific situation.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate