Income Tax Regulations

2402 For the purposes of clause 138(3)(a)(iii)(B) of the Act and subparagraph 309(1)(e)(i), in computing a life insurer’s income for a taxation year from its participating life insurance business carried on in Canada,

• (a) there shall be included that proportion of the insurer’s gross Canadian life investment income for the year that

  • (i) the aggregate of the insurer’s mean maximum tax actuarial reserve for the year in respect of participating life insurance policies in Canada and the mean amount on deposit with the insurer for the year in respect of those policies

  is of

  • (ii) the aggregate of amounts, each of which is

    • (A) the insurer’s mean maximum tax actuarial reserve for the year in respect of a class of life insurance policies in Canada, or

    • (B) the mean amount on deposit with the insurer for the year in respect of a class of policies described in clause (A);

• (b) there shall be included

  • (i) the amount deducted by the insurer under subparagraph 138(3)(a)(iv) of the Act in computing its income for the immediately preceding taxation year,

  • (ii) the insurer’s maximum tax actuarial reserve for the immediately preceding taxation year in respect of participating life insurance policies in Canada,

  • (iii) the maximum amount deductible by the insurer under subparagraph 138(3)(a)(ii) of the Act in computing its income for the immediately preceding taxation year in respect of participating life insurance policies in Canada, and

  • (iv) that proportion of the amount included in income by the insurer for the year under section 12.3 that

    • (A) the amount determined under clause (f)(iii)(A) for its first taxation year that begins after June 17, 1987 and ends after 1987

    is of

    • (B) the amount determined under clause (f)(iii)(B) for its first taxation year that begins after June 17, 1987 and ends after 1987;

• (c) there shall not be included any amount in respect of the insurer’s participating life insurance policies in Canada that was deducted under subparagraph 138(3)(a)(i) or (ii) of the Act in computing its income for the immediately preceding taxation year;

• (d) except as otherwise provided in paragraph (a), there shall not be included any amount as a reserve that was deducted under paragraph 20(1)(l) of the Act in computing the insurer’s income for the immediately preceding taxation year;

• (e) except as otherwise provided in paragraph (a), there shall not be included

  • (i) any amount that was included in income for the year by the insurer pursuant to paragraph 138(4)(b) or (c) of the Act, or

  • (ii) any amount that was included in computing the insurer’s gains or taxable capital gains for the year from the disposition of property;

• (f) there shall be deducted

  • (i) the insurer’s maximum tax actuarial reserve for the year in respect of participating life insurance policies in Canada,

  • (ii) the maximum amount deductible by the insurer under subparagraph 138(3)(a)(ii) of the Act in computing its income for the year in respect of participating life insurance policies in Canada, and

  • (iii) that proportion of the amount deducted from income by the insurer for the year under subsection 20(26) that

    • (A) the amount determined in respect of the insurer for the year under subparagraph (a)(i)

    is of

    • (B) the amount determined in respect of the insurer for the year under subparagraph (a)(ii);

• (g) no deduction shall be made in respect of any amount deductible under subparagraph 138(3)(a)(iii) or (iv) of the Act in computing the insurer’s income for the year;

• (h) except as otherwise provided in paragraph (a), no deduction shall be made in respect of

  • (i) any amount deductible under paragraph 138(3)(b) or (d) of the Act in computing the insurer’s income for the year,

  • (ii) any amount deductible as a reserve under paragraph 20(1)(l) of the Act in computing the insurer’s income for the year, or

  • (iii) any amount included in computing the insurer’s losses or allowable capital losses for the year from the disposition of property;

• (i) except as otherwise provided in paragraph (f), no deduction shall be made in respect of a reserve deductible under subparagraph 138(3)(a)(i) or (ii) of the Act in computing the insurer’s income for the year; and

• (j) except as otherwise provided in this section, the provisions of the Act relating to the computation of income from a source shall apply.