REVENUE CANADA TAXATION MEMORANDUM
DATE February 14, 1990
TO: Registration Charities Division Ron Porteous
FROM: Financial Industries Division M. M Trotier 957-8957
SUBJECT: Universal Life Policies
Following your telephone conversation on February 9, 1990 with Michele Trotier of our Directorate, this is to confirm our response to your query of January 3, 1990 as to whether gifts of "universal life" policies can qualify as charitable donations as described in Interpretation Bulletin IT-244R2 .
Notwithstanding the IT only refers to "term" and "whole life" policies, we are of the view that a transfer of or payments of premiums in respect of such policies could qualify as charitable donations where there has been an absolute assignment of the policy to the charity and where no right, privilege, benefit or advantage can accrue to the donor as a result of the gift. However this is a question of fact, that can only be determined after consideration of the circumstances of a particular situation.
Whether or not a charity is willing to accept an interest in such a policy as a charitable donation, where it otherwise qualifies, may depend on the implications that such a policy may have, inter alia, on the computation of the disbursement quota of the particular charity. We understand that this issue has recently been raised by a taxpayer with our Services, Public Utilities and Exempt Corporations Section (Ernie Wheeler, Chief 957-2100).
We trust that the above comments will be of assistance.
Chief Financial Institutions Section Financial Industries Division Rulings Directorate