Income Tax Regulations — 307
307 (1) For the purposes of this Part and sections 12.2 and 148 of the Act, accumulating fund , at any particular time, means (a) in respect of a taxpayer’s interest in an annuity contract (other than a contract issued by a life insurer), the amount that is the greater of (i) the amount, if any, by which the cash surrender value of the taxpayer’s interest at that time exceeds the amount payable, if any, in respect of a loan outstanding at that time made under the contract in respect of the interest, and (ii) the amount, if any, by which (A) the present value at that time of future payments to be made out of the contract in respect of the taxpayer’s interest exceeds (B) the total of (I) the present value at that time of future premiums to be paid under the contract in respect of the taxpayer’s interest, and (II) the amount payable, if any, in respect of a loan outstanding at that time, made under the contract in respect of the taxpayer’s interest; (b) in respect of a taxpayer’s interest in a life insurance policy (other than an exemption test policy or an annuity contract to which paragraph (1)(a) applies), the product obtained when, (i) where the policy is not a deposit administration fund policy and the particular time is immediately after the death of any person on whose life the life insurance policy is issued or effected, the aggregate of the maximum amounts that could be determined by the life insurer immediately before the death in respect of the policy under paragraph 1401(1)(c) and subparagraph 1401(1)(d)(i) if the mortality rates used were adjusted to reflect the assumption that the death would occur at the time and in the manner that it did occur, and (ii) in any other case, the maximum amount that could be determined at that particular time by the life insurer under paragraph 1401(1)(a), computed as though there were only one deposit administration fund policy, or under paragraph 1401(1)(c), as the case may be, in respect of the policy is multiplied by (iii) the taxpayer’s proportionate interest in the policy; and (c) in respect of an exemption test policy, (i) if the particular time is during the exemption test policy’s pay period, the amount determined by the formula A × B/C where A is the amount that would be determined under subparagraph (ii) in respect of the exemption test policy (A) if the exemption test policy’s pay period is determined by subparagraph (b)(i) or (ii) of the definition pay period in section 310, on the first policy anniversary that is on or after the day on which the individual whose life is insured would, if the individual survived, attain the age of 105 years, as defined under the terms of the policy, and (B) in any other case, on the exemption test policy’s policy anniversary represented by the adjectival form of the number of years in its pay period, B is the number of years since the exemption test policy was issued, and C is the number of years in the exemption test policy’s pay period, (ii) if the particular time is after the exemption test policy’s pay period and before its endowment date, the amount that is the present value at the particular time of the future benefit on death under the exemption test policy, and (iii) if the particular time is on or after the exemption test policy’s endowment date and the relevant life insurance policy is issued after 2016, the amount that is the benefit on death under the exemption test policy at the particular time. (2) For the purposes of subsection (1), when computing the accumulating fund in respect of (a) an interest described in paragraph (1)(a), the amounts determined under clauses (1)(a)(ii)(A) and (B) are to be computed using, (i) where an interest rate for a period used by the issuer when the contract was issued in determining the terms of the contract was less than any rate so used for a subsequent period, the single rate that would, if it applied for each period, have produced the same terms, and (ii) in any other case, the rates used