Income Tax Act — I-3.3 148.1
 for the purpose of funding funeral or cemetery services with respect to the individual. ( versement admissible ) Exemption for eligible funeral arrangements (2) Notwithstanding any other provision of this Act, (a) no amount that has accrued, is credited or is added to an eligible funeral arrangement shall be included in computing the income of any person solely because of such accrual, crediting or adding; (b) subject to paragraph 148.1(2)(c) and subsection 148.1(3), no amount shall be (i) included in computing a person’s income solely because of the provision by another person of funeral or cemetery services under an eligible funeral arrangement, or (ii) included in computing a person’s income because of the disposition of an interest under an eligible funeral arrangement or an interest in a trust governed by an eligible funeral arrangement; and (c) subparagraph 148.1(2)(b)(ii) shall not affect the consequences under this Act of the disposition of any right under an eligible funeral arrangement to payment for the provision of funeral or cemetery services. Income inclusion on return of funds (3) Where at any particular time in a taxation year a particular amount is distributed (otherwise than as payment for the provision of funeral or cemetery services with respect to an individual) to a taxpayer from an arrangement that was, at the time it was established, an eligible funeral arrangement and the particular amount is paid from the balance in respect of the individual under the arrangement, there shall be added in computing the taxpayer’s income for the year from property the lesser of the particular amount and the amount determined by the formula A + B - C where A is the balance in respect of the individual under the arrangement immediately before the particular time (determined without regard to the value of property in a cemetery care trust); B is the total of all payments made from the arrangement before the particular time for the provision of funeral or cemetery services with respect to the individual (other than cemetery services funded by property in a cemetery care trust); and C is the amount determined by the formula D – E where D is the total of all relevant contributions made before the particular time in respect of the individual under the arrangement (other than contributions in respect of the individual that were in a cemetery care trust), and E is the total of all amounts each of which is the amount, if any, by which (a) an amount relating to the balance in respect of the individual under the arrangement that is deemed by subsection (4) to have been distributed before the particular time from the arrangement exceeds (b) the portion of the amount referred to in paragraph (a) that is added, because of this subsection, in computing a taxpayer’s income. Deemed distribution on transfer (4) If at a particular time an amount relating to the balance in respect of an individual (referred to in this subsection and in subsection (5) as the “transferor”) under an eligible funeral arrangement (referred to in this subsection and in subsection (5) as the “transferor arrangement”) is transferred, credited or added to the balance in respect of the same or another individual (referred to in this subsection and in subsection (5) as the “recipient”) under the same or another eligible funeral arrangement (referred to in this subsection and in subsection (5) as the “recipient arrangement”), (a) the amount is deemed to be distributed to the transferor (or, if the transferor is deceased at the particular time, to the recipient) at the particular time from the transferor arrangement and to be paid from the balance in respect of the transferor under the transferor arrangement; and (b) the amount is deemed to be a contribution made (other than by way of a transfer from an eligible funeral arrangement) at the particular time under the recipient arrangement for the purpose of funding funeral or cemetery services with respect to the recipie