Income Tax Act — I-3.3 138
pplying subsections (18) and (19) to an insurer for a taxation year of the insurer in respect of International Financial Reporting Standards, (a) the reference to “policy reserve” in the description of C in the definition reserve transition amount in subsection (12) is to be read as a reference to “policy reserve determined without reference to the insurer’s excluded policies”; (b) the description of D in the definition reserve transition amount in subsection (12) is to be read as follows: D is the amount determined by the formula D.1 − D.2 where D.1 is the maximum amount that the insurer is permitted to claim under paragraph 20(7)(c) as a policy reserve determined without reference to the insurer’s excluded policies, and D.2 is the amount of policy acquisition costs of the insurer that is not deductible, but in the absence of subsection 18(9.02) (as it read in the base year) would have been deductible, in the base year or a preceding taxation year; (c) the reference to “life insurance policies” in the description of G in the definition reserve transition amount in subsection (12) is to be read as a reference to “life insurance policies other than excluded policies”; and (d) the amount included in the description of H in the definition reserve transition amount in subsection (12) is to be determined without reference to excluded policies. Transition year income inclusion reversal (18) If an amount has been included under subsection (16) in computing an insurer’s income for its transition year from an insurance business carried on by it, there shall be deducted in computing the insurer’s income, for each particular taxation year of the insurer that ends after the beginning of the transition year, from that insurance business, the amount determined by the formula A × B/1825 where A is the amount included under subsection (16) in computing the insurer’s income for the transition year from that insurance business; and B is the number of days in the particular taxation year that are before the day that is 1825 days after the first day of the transition year. Transition year income deduction reversal (19) If an amount has been deducted under subsection (17) in computing an insurer’s income for its transition year from an insurance business carried on by it, there shall be included in computing the insurer’s income, for each particular taxation year of the insurer that ends after the beginning of the transition year, from that insurance business, the amount determined by the formula A × B/1825 where A is the amount deducted under subsection (17) in computing the insurer’s income for the transition year from that insurance business; and B is the number of days in the particular taxation year that are before the day that is 1825 days after the first day of the transition year. Winding-up (20) If an insurer has, in a winding-up to which subsection 88(1) has applied, been wound-up into another corporation (referred to in this subsection as the “parent”), and immediately after the winding-up the parent carries on an insurance business, in applying subsections (18) and (19) in computing the income of the insurer and of the parent for particular taxation years that end on or after the first day (referred to in this subsection as the “start day”) on which assets of the insurer were distributed to the parent on the winding-up, (a) the parent is, on and after the start day, deemed to be the same corporation as and a continuation of the insurer in respect of (i) any amount included under subsection (16) or deducted under subsection (17) in computing the insurer’s income from an insurance business for its transition year, (ii) any amount deducted under subsection (18) or included under subsection (19) in computing the insurer’s income from an insurance business for a taxation year of the insurer that begins before the start day, and (iii) any amount that would — in the absence of this subsection and if the insurer existed and carried on an insur