24(1)
5-903298
N. Goldstein
(613) 952-9853
19(1)December 20, 1990
Dear Sir:
We are responding to your letter of November 15, 1990 in which you asked if the taxation of a life insurance policy is independent of the nature of the issuer of the policy, be it a stock company, mutual company, fraternal organization or benevolent society.
Subsection 148(1) of the Income Tax Act (the "Act") provides that there shall be included in the income of a policyholder, in respect of the disposition of an interest in a life insurance policy, the amount by which the proceeds of disposition, if any, exceeds the adjusted cost base of the policy to the policyholder. A "life insurance policy" is defined in paragraph 138(12)(f) of the Act. There is no distinction in the definition of "life insurance policy" between types of issuers. Similarly, in subsection 148(1) of the Act, there is no distinction made between types of issuers of life insurance policies which would affect the amount to be included in income on the disposition of a life insurance policy.
While we trust the foregoing comments are of assistance, the opinions expressed herein are not advance income tax rulings and accordingly are not binding on Revenue Canada, Taxation as stated in paragraph 24 of Information Circular 70-6R2.
Yours truly,
for Director Financial Industries Division Rulings Directorate