Income Tax Regulations — 2401
2401 (1) For the purposes of the definition designated insurance property in subsection 138(12) of the Act, designated insurance property of an insurer for a taxation year means property that is designated in accordance with subsections (2) to (7) for the year (a) by the insurer in its return of income under Part I of the Act for the year; or (b) if the Minister determines that the insurer has not made a designation that is in accordance with the prescribed rules found in this section, by the Minister. Designation Rules (2) For the purposes of subsection (1), an insurer, or the Minister if paragraph (1)(b) applies, (a) shall designate for a taxation year investment property of the insurer for the year with a total value for the year equal to the insurer’s mean Canadian reserve liabilities for the year in respect of its life insurance business in Canada; (b) shall designate for a taxation year investment property of the insurer for the year with a total value for the year equal to the insurer’s mean Canadian reserve liabilities for the year in respect of its accident and sickness insurance business in Canada; (c) shall designate for a taxation year in respect of the insurer’s insurance business in Canada (other than a life insurance business or an accident and sickness insurance business) investment property of the insurer for the year with a total value for the year equal to the amount of the insurer’s mean Canadian reserve liabilities for the year in respect of that business; (d) if (i) the insurer’s mean Canadian investment fund for a taxation year exceeds (ii) the total value for the year of all property required to be designated under paragraph (a), (b) or (c) for the year, shall designate for the year, in respect of a particular insurance business that the insurer carries on in Canada, investment property of the insurer for the year with a total value for the year equal to that excess; (e) for greater certainty, under each of paragraphs (a), (b), (c) and (d), shall designate for the taxation year investment property with a total value for the year equal to the amount, if any, determined under each of those paragraphs, and no investment property, or portion of investment property, designated for the year under any of paragraphs (a) to (d) may be designated for the year under any other paragraph; and (f) may designate for a taxation year a portion of a particular investment property if the designation of the entire property would result in a designation of property with a total value for the year exceeding that required to be designated under paragraphs (a) to (d) for the year. Order of Designation of Properties (3) For the purpose of subsection (2), investment property of an insurer for a taxation year shall be designated for the year in respect of the insurer’s insurance businesses carried on by it in Canada in the following order: (a) Canadian investment property of the insurer for the year owned by the insurer at the beginning of the year that was designated insurance property of the insurer for its preceding taxation year, except that such property shall be designated in the following order: (i) real and depreciable property, (ii) mortgages, hypothecs, agreements of sale and other forms of indebtedness in respect of real property situated in Canada or depreciable property situated in Canada or depreciable property leased to a person resident in Canada for use inside and outside of Canada, and (iii) other property; (b) investment property (other than Canadian investment property of the insurer for the year) owned by the insurer at the beginning of the year that was designated insurance property of the insurer for its preceding taxation year; (c) Canadian investment property of the insurer for the year (other than property included in paragraph (a)) in the order set out in subparagraphs (a)(i) to (iii); and (d) other investment property. Equity Limit for the Year (4) Notwithstanding subsections (2) and (3), (a) the total