Income Tax Act — I-3.3 138.1
fund (other than the portion of the premium that is an acquisition fee), and (iii) the portion of a premium included in a segregated fund is deemed not to be an amount paid in respect of a premium under the policy; (f) the taxable income of the related segregated fund trust is deemed for the purposes of subsections 104(6), (13) and (24) to be an amount that has become payable in the year to the beneficiaries under the segregated fund trust and the amount therefor in respect of any particular beneficiary is equal to the amount determined by reference to the terms and conditions of the segregated fund policy; (g) where at a particular time the fair market value of property transferred by the insurer to the segregated fund results in an increase at that time in the portion of the insurer’s reserves for a segregated fund policy held by a policyholder that vary with the fair market value of the segregated fund and a decrease in the portion of its reserves for the policy that do not so vary, the amount of that increase shall, (i) for the purpose of the determination of H in the definition adjusted cost basis in subsection 148(9), be deemed to be proceeds of disposition that the policyholder became entitled to receive at that time, (ii) for the purpose of computing the adjusted cost base to the policyholder of the policyholder’s interest in the related segregated fund trust, be added at that time to the cost to the policyholder of that interest, and (iii) for the purpose of computing the insurer’s income, be deemed to be a payment under the terms and conditions of the policy at that time; (h) where at a particular time the fair market value of property transferred by the insurer from the segregated fund results in an increase at that time in the portion of the insurer’s reserves for a segregated fund policy that do not vary with the fair market value of the segregated fund and a decrease in the portion of its reserves for the policy that so vary, the amount of that increase shall, for the purpose of calculating the insurer’s income, be deemed to be a premium received by the insurer at that time; (i) where at a particular time the policyholder of a segregated fund policy disposes of all or a portion of the policyholder’s interest in the related segregated fund trust, that proportion of the amount, if any, by which the acquisition fee with respect to the particular policy exceeds the total of amounts each of which is an amount determined under this paragraph with respect to the particular policy before that time, that (i) the fair market value of the interest disposed of at that time is of (ii) the fair market value of the policyholder’s interest in the particular segregated fund trust immediately before that time, is deemed to be a capital loss of the related segregated fund trust that reduces the policyholder’s benefits under the particular policy by that amount for the purposes of subsection 138.1(3); (j) the obligations of an insurer in respect of a benefit that is payable under a segregated fund policy, the amount of which benefit varies with the fair market value of the segregated fund at the time the benefit becomes payable, are deemed to be obligations of the trustee under the related segregated fund trust and not of the insurer and any amount received by the policyholder or that the policyholder became entitled to receive at any particular time in a year in respect of those obligations is deemed to be proceeds from the disposition of an interest in the related segregated fund trust; (k) a reference to “the terms and conditions of the trust arrangement” in section 104 or subsection 127.2(3) is deemed to include a reference to the terms and conditions of the related segregated fund policy and the trustee is deemed to have designated the amounts referred to in that section in accordance with those terms and conditions; and (l) where at any time an insurer acquires a share as a first registered holder thereof and allocates the sha