A. Jane (613) 957-2126
November 6, 1986
Dear: XXX
Re: Definition of Disability For Prescribed Annuity Treatment
Your letter of July 30, 1986 concerning a definition for the term "totally and permanently disabled" with respect to a prescribed annuity contract has been referred to this office for reply.
XXX
For the purposes of the definition of a prescribed annuity contract, the requirement that the holder of an annuity contract be 60 years of age or be an individual who is totally and permanently disabled is found in subparagraph 304(1)(d)(i) of the Income Tax Regulations (the "Regulations"). The phrase "totally and permanently disabled" is not defined in the Income Tax Act or in the Regulations. The issue of whether or not an individual is totally and permanently disabled is a question of fact to be determined based on the circumstances in each case.
Where an individual is considered totally and permanently disabled for the purposes of CPP/QPP or UIC benefits, in our view, that individual meets the requirement of subparagraph 304(1)(d)(i) of the Regulations. In other situations the Department's practice is to permit the insurance industry to interpret the words totally and permanently disabled as they are interpreted for purposes of insurance law and to make determinations on a case by case basis. An accepted interpretation of these words is that a disabled person is not considered to be totally and permanently disabled if he can regularly pursue any substantially gainful employment.
The evidence required to substantiate one's disability would, of course, depend upon the circumstances in each case. However, in most cases, a medical specialist's factual description of the individual's physical condition and disability, with details of expected duration and the effect on his ability to work would be required to determine whether the individual was totally and permanently disabled for purposes of the Regulations. If such evidence is satisfactory the Department will consider the individual to be totally and permanently disabled. With respect to Form T2201 which is to be revised for 1986, in our view, this form is not relevant because it is in specific reference to paragraph 110(l)(e) of the Act which contains a different test than set out in Regulation 304(l)(d)(i). Furthermore, this form is inadequate to make the determination in light of the type of information that is required as described above.
We trust this will be of assistance.
Yours truly,
ORIGINAL SIGNED BY Wm. R. McColm
for Director Reorganizations and Non-Resident Division Specialty Rulings Directorate Legislative and Intergovernme Affairs Branch