Income Tax Act — I-3.3 138
in respect of a commission paid or payable by the purchaser to the vendor in respect of the amount referred to in subparagraph 138(11.92)(d)(i) shall be deemed to have been paid or payable or received or receivable, as the case may be, by the vendor or the purchaser, as the case may be, in the course of carrying on the business or line of business, as the case may be, and (e) where the vendor has disposed of all or substantially all of an insurance business referred to in paragraph 138(11.92)(a), the vendor shall, for the purposes of section 219, be deemed to have ceased to carry on that business at that time. Property acquired on default in payment (11.93) Where, at any time in a taxation year of an insurer, the beneficial ownership of property is acquired or reacquired by the insurer in consequence of the failure to pay all or any part of an amount (in this subsection referred to as the “insurer’s claim”) owing to the insurer at that time in respect of a bond, debenture, mortgage, hypothecary claim, agreement of sale or any other form of indebtedness owned by the insurer, the following rules apply to the insurer: (a) section 79.1 does not apply in respect of the acquisition or reacquisition; (b) the insurer shall be deemed to have acquired or reacquired, as the case may be, the property at an amount equal to the fair market value of the property, immediately before that time; (c) the insurer shall be deemed to have disposed at that time of the portion of the indebtedness represented by the insurer’s claim for proceeds of disposition equal to that fair market value and, immediately after that time, to have reacquired that portion of the indebtedness at a cost of nil; (d) the acquisition or reacquisition shall be deemed to have no effect on the form of the indebtedness; and (e) in computing the insurer’s income for the year or a subsequent taxation year, no amount is deductible under paragraph 20(1)(l) in respect of the insurer’s claim. Transfer of insurance business by resident insurer (11.94) Where (a) an insurer resident in Canada (in this subsection referred to as the “transferor”) has, at any time in a taxation year, ceased to carry on all or substantially all of an insurance business carried on by it in Canada in that year, (b) the transferor has, at that time or within 60 days after that time, (i) in the case of a transferor that is a life insurer and that carries on an insurance business in Canada and in a country other than Canada in the year, transferred all or substantially all of the property (in subsection (11.5) referred to as the “transferred property”) that is owned by it at that time and that was designated insurance property in respect of the business for the taxation year that, because of paragraph (11.5)(h), ended immediately before that time, or (ii) in any other case, transferred all or substantially all of the property owned by it at that time and used by it in the year in, or held by it in the year in the course of, carrying on that insurance business in Canada in that year (in subsection (11.5) referred to as the “transferred property”) to a corporation resident in Canada (in this subsection referred to as the “transferee”) that is a qualified related corporation (within the meaning assigned by subsection 219(8)) of the transferor that, immediately after that time, began to carry on that insurance business in Canada for consideration that includes shares of the capital stock of the transferee, (c) the transferee has, at that time or within 60 days thereafter, assumed or reinsured all or substantially all of the obligations of the transferor that arose in the course of carrying on that insurance business in Canada, and (d) the transferor and the transferee have jointly elected in prescribed form and in accordance with subsection 138(11.6), paragraphs 138(11.5)(e) to 138(11.5)(m) and subsections 138(11.7) to 138(11.9) apply in respect of the transfer. Definitions (12) In this section, accumulated 1968 de