Income Tax Act — I-3.3 138.1
der the policy at that time is affected by the capital gain or capital loss in respect of property held by the related segregated fund trust at that time, (e) the allocation referred to in paragraph 138.1(4)(d) is deemed to have been made immediately before the withdrawal, (f) any capital gain not so allocated is deemed to be allocated in accordance with the terms and conditions of the policy, and (g) any capital loss not so allocated is deemed to be a superficial loss of each policyholder to the extent that the policyholder’s benefits under the policy would be affected by the loss. Adjusted cost base of property in related segregated fund trust (5) At any particular time, the adjusted cost base of each capital property of a related segregated fund trust shall be deemed to be the amount, if any, by which (a) the adjusted cost base of the property to the trust immediately before that time exceeds (b) the total of amounts each of which is an amount in respect of the disposition by a policyholder of all or part of the policyholder’s interest in the related segregated fund trust at that time equal to that proportion of the amount, if any, by which (i) the adjusted cost base to the policyholder of that interest at that time exceeds (ii) the policyholder’s proceeds of the disposition of that interest in the trust that (iii) the fair market value of the capital property at that time is of (iv) the total of amounts each of which is the fair market value of a capital property of the related segregated fund trust at that time. Definition of acquisition fee (6) In this section, acquisition fee means the amount, if any, by which the total of amounts each of which is (a) that portion of a premium charged by the insurer under a segregated fund policy that is not included in the related segregated fund or cannot reasonably be regarded as an amount required to fund a mortality or maturity benefit, (b) a transfer from the segregated fund that cannot reasonably be regarded as an amount required to fund a mortality or maturity benefit other than an annual administration fee or charge, or (c) any amount by which the proceeds payable to the policyholder under a particular segregated fund policy is reduced on the surrender or partial surrender of the policy that may reasonably be regarded as a surrender fee, exceeds (d) the total of amounts each of which is that portion of an amount described in paragraph 138.1(6)(a), 138.1(6)(b) or 138.1(6)(c) that may reasonably be considered to be in respect of an interest in the segregated fund that was disposed of before 1978. Non-application of subsections (1) to (6) (7) Subsections (1) to (6) do not apply to the holder of a segregated fund policy with respect to such a policy that is issued or effected as or under a FHSA, pooled registered pension plan, registered pension plan, registered retirement income fund, registered retirement savings plan or TFSA. [NOTE: Application provisions are not included in the consolidated text; see relevant amending Acts and regulations.] R.S., 1985, c. 1 (5th Supp.), s. 138.1; 1994, c. 7, Sch. VIII, s. 80; 2001, c. 17, s. 134; 2008, c. 28, s. 22; 2012, c. 31, s. 31; 2013, c. 34, s. 287; 2014, c. 39, s. 47; 2017, c. 33, s. 54 2022, c. 19, s. 27