Income Tax Act — I-3.3 139.1
enefit because of the stakeholder’s interest in a group insurance policy under which individuals have been insured in the course of or because of their employment, (b) at all times before the payment of a premium described in paragraph (c), the full cost of a particular insurance coverage under the policy was borne by the individuals who were insured under the particular coverage, (c) the stakeholder pays a premium under the policy in respect of the particular coverage or under another group insurance policy in respect of coverage that has replaced the particular coverage, and (d) either (i) the premium is deemed by paragraph (9)(c) to have been paid, or (ii) it is reasonable to conclude that the purpose of the premium is to apply, for the benefit of the individuals who are insured under the particular coverage or the replacement coverage, all or part of the value of the portion of the conversion benefit that can reasonably be considered to be in respect of the particular coverage, the following rules apply: (e) for the purposes of paragraph 6(1)(f) and regulations made for the purposes of subsection 6(4), the premium is deemed to be an amount paid by the individuals who are insured under the particular coverage or the replacement coverage, as the case may be, and not to be an amount paid by the stakeholder, and (f) no amount may be deducted in respect of the premium in computing the stakeholder’s income. Flow-through of conversion benefits to employees and others (16) Where (a) a stakeholder receives a conversion benefit (in this subsection referred to as the “relevant conversion benefit”) because of the interest of any person in an insurance policy, (b) the stakeholder makes a payment of an amount (otherwise than by way of a transfer of a share that was received by the stakeholder as all or part of the relevant conversion benefit and that was not so received as a taxable conversion benefit) to a particular individual (i) who has received benefits under the policy, (ii) who has, or had at any time, an absolute or contingent right to receive benefits under the policy, (iii) for whose benefit insurance coverage was provided under the policy, or (iv) who received the amount because an individual satisfied the condition in subparagraph (i), (ii) or (iii), (c) it is reasonable to conclude that the purpose of the payment is to distribute an amount in respect of the relevant conversion benefit to the particular individual, (d) either (i) the main purpose of the policy was to provide retirement benefits or insurance coverage to individuals in respect of their employment with an employer, or (ii) all or part of the cost of insurance coverage under the policy had been borne by individuals (other than the stakeholder), (e) subsection (14) does not apply to the relevant conversion benefit, and (f) one of the following applies, namely, (i) the particular individual is resident in Canada at the time of the payment, the stakeholder is a person the taxable income of which is exempt from tax under this Part and the payment would, if this section were read without reference to this subsection, be included in computing the income of the particular individual, (ii) the payment is received before Decenber 7, 1999 and the stakeholder elects in writing filed with the Minister, on a day that is not more than six months after the end of the taxation year in which the stakeholder receives the relevant conversion benefit (or a later day acceptable to the Minister), that this subsection applies in respect of the payment, (iii) the payment is received after December 6, 1999, the payment would, if this section were read without reference to this subsection, be included in computing the income of the particular individual and the stakeholder elects in writing filed with the Minister, on a day that is not more than six months after the end of the taxation year in which the stakeholder receives the relevant conversion benefit (or a later day acceptable to th