Income Tax Regulations — 1404
1404 (1) For the purpose of subparagraph 138(3)(a)(i) of the Act, there may be deducted, in computing a life insurer’s income from carrying on its life insurance business in Canada for a taxation year in respect of its groups of life insurance contracts in Canada at the end of the year, the amount the insurer claims, not exceeding (a) the amount determined under subsection (3) in respect of the insurer for the year, where that amount is greater than nil; and (b) nil, in any other case. (2) For the purpose of paragraph 138(4)(b) of the Act, the amount prescribed in respect of an insurer for a taxation year, in respect of its groups of life insurance contracts in Canada at the end of the year, is (a) the absolute value of the amount determined under subsection (3) in respect of the insurer for the year, where that amount is less than nil; and (b) nil, in any other case. (3) For the purposes of paragraphs (1)(a) and (2)(a), the amount determined under this subsection in respect of an insurer for a taxation year, for groups of life insurance contracts in Canada of the insurer at the end of the year, is the positive or negative amount determined by the formula A + B − (0.9 × C) − (D − (0.9 × E)) where A is the total of all amounts each of which is the liability for remaining coverage for a group of life insurance contracts in Canada of the insurer at the end of the year; B is the total of all amounts each of which is the liability for incurred claims for a group of life insurance contracts in Canada of the insurer at the end of the year; C is the total of all amounts each of which is the contractual service margin for a group of life insurance contracts in Canada (other than a group of segregated fund policies) of the insurer at the end of the year; D is the total of all amounts each of which is an amount, in respect of a group of reinsurance contracts held by the insurer at the end of the year, that is (a) if no portion of the reinsurance contract held amount for the group is in respect of the reinsurance of a risk under an insurance policy other than a life insurance policy in Canada, the reinsurance contract held amount for the group, and (b) in any other case, the amount that would be the reinsurance contract held amount for the group if the amount were determined excluding any portion that is in respect of the reinsurance of a risk under an insurance policy other than a life insurance policy in Canada; and E is the total of all amounts each of which is an amount, in respect of a group of reinsurance contracts held by the insurer at the end of the year, that is (a) if no portion of the contractual service margin for the group is in respect of the reinsurance of a risk under an insurance policy other than a life insurance policy in Canada that is not a segregated fund policy, the contractual service margin for the group, and (b) in any other case, the amount that would be the contractual service margin for the group if the contractual service margin were determined excluding any portion that is in respect of the reinsurance of a risk under insurance policies other than a life insurance policy in Canada that is not a segregated fund policy. [NOTE: Application provisions are not included in the consolidated text; see relevant amending Acts and regulations.] SOR/79-425, s. 1; SOR/80-419, s. 3; SOR/83-865, s. 6; SOR/84-948, s. 9; SOR/88-165, ss. 9, 30(F); SOR/90-661, s. 5; SOR/92-51, s. 8; SOR/93-564, s. 1; SOR/94-415, s. 7; SOR/94-686, ss. 55(F), 56(F), 79(F); SOR/96-443, s. 2; SOR/99-269, s. 6; SOR/2002-123, ss. 3, 4; 2009, c. 2, s. 100 2022, c. 19, s. 80