Income Tax Regulations — 1900
taxable life insurance policy of the insurer, to the extent that the premium is included in computing the insurer’s income from carrying on a life insurance business in Canada for the year; and F is the positive or negative amount, as the case may be, determined by the formula O + P - Q - R where O is the total of all amounts each of which is an amount in respect of a group term life insurance policy equal to the lesser of (a) the amount of interest credited by the insurer in the year on account of the policy (other than interest payable in respect of the period ending on its first anniversary date after March 2, 1988), and (b) the amount, if any, by which the maximum amount that would be deductible under subparagraph 138(3)(a)(i) of the Act pursuant to paragraph 1401(1)(c.1) in respect of the policy in computing the insurer’s income for the year, if that amount were determined without reference to any reinsurance arrangement, exceeds the maximum amount that would have been so deductible in computing the insurer’s income for the immediately preceding year, P is 80 per cent of the total of all amounts each of which is the amount in respect of a liability of the insurer, a benefit, a risk or a guarantee, in respect of which an amount is determined under paragraph 1401(1)(a), (c) or (d) for the year, in respect of a pre-funded group life insurance policy of the insurer, determined by multiplying (a) the rate of interest used in determining the amount under paragraph 1401(1)(a), (c) or (d), as the case may be, for the year in respect of the liability, benefit, risk or guarantee, as the case may be, by 1/2 of the total of (b) the maximum amount that would be deductible under subparagraph 138(3)(a)(i) of the Act pursuant to paragraph 1401(1)(a), (c) or (d), as the case may be, in respect of the liability, benefit, risk or guarantee, as the case may be, in computing the insurer’s income for the year if that amount were determined without reference to any policy loan or reinsurance arrangement, and (c) the maximum amount that would have been deductible under subparagraph 138(3)(a)(i) of the Act pursuant to paragraph 1401(1)(a), (c) or (d), as the case may be, in respect of the liability, benefit, risk or guarantee, as the case may be, in computing the insurer’s income for the immediately preceding taxation year if that amount were determined without reference to any policy loan or reinsurance arrangement, Q is the total of all amounts each of which is the amount determined for the year in respect of a taxable life insurance policy of the insurer by multiplying (a) the rate of interest used in determining the maximum amount deductible under subparagraph 138(3)(a)(i) of the Act pursuant to paragraph 1401(1)(c) in respect of the policy in computing the insurer’s income for the year, by 1/2 of the total of (b) the maximum amount that would be deductible under subparagraph 138(3)(a)(ii) of the Act in respect of the policy in computing the insurer’s income for the year, if that amount were determined without reference to any reinsurance arrangement, and (c) the maximum amount that would have been deductible under subparagraph 138(3)(a)(ii) of the Act in respect of the policy in computing the insurer’s income for the immediately preceding taxation year, if that amount were determined without reference to any reinsurance arrangement, and R is the total of all amounts each of which is an amount in respect of a group term life insurance policy equal to the amount, if any, by which (a) the total of all amounts determined in respect of the insurer under the description of O in respect of the policy for taxation years ending before the year exceeds the total of (b) the total of all amounts determined in respect of the insurer under the description of R in respect of the policy for taxation years ending before the year, and (c) the maximum amount that would be deductible under subparagraph 138(3)(a)(i) of the Act pursuant to paragraph 1401(1)(c.1)