Income Tax Regulations — 300
r year in which the particular date occurs; and (c) if, in the event of the death of the individual before the annual payments total a stated sum, the contract provides that the unpaid balance of the stated sum is to be paid in a lump sum or instalments, then for the purpose of determining the expected term of the contract, the contract is deemed to provide for the continuance of the payments under the contract for a minimum term certain equal to the nearest whole number of years required to complete the payment of the stated sum. (3) Where (a) an annuity contract is a life annuity contract entered into before November 17, 1978 under which the annuity payments commence on the death of an individual, (a.1) [Repealed, SOR/83-865, s. 1] (b) an annuity contract (other than an annuity contract described in paragraph (a)) is (i) a life annuity contract entered into before October 23, 1968, or (ii) any other annuity contract entered into before January 4, 1968, under which the annuity payments commence (iii) on the expiration of a term of years, and (iv) before the later of January 1, 1970 and the tax anniversary date of the annuity contract, the adjusted purchase price of a taxpayer’s interest in the annuity contract shall be (c) the lump sum, if any, that the person entitled to the annuity payments might have accepted in lieu thereof, at the date the annuity payments commence; (d) if no lump sum described in paragraph (c) is provided for in the contract, the sum ascertainable from the contract as the present value of the annuity at the date the annuity payments commence; and (e) if no lump sum described in paragraph (c) is provided for in the contract and no sum is ascertainable under paragraph (d), (i) in the case of a contract issued under the Government Annuities Act , the premiums paid, accumulated with interest at the rate of four per cent per annum to the date the annuity payments commence, and (ii) in the case of any other contract, the present value of the annuity payments at the date on which payments under the contract commence, computed by applying (A) a rate of interest of four per cent per annum where the payments commence before 1972 and 5 1/2 per cent per annum where the payments commence after 1971, and (B) the provisions of subsection (2) where the payments depend on the survival of a person. (4) Where an annuity contract would be described in paragraph (3)(b) if the reference in subparagraph (iv) thereof to “before the later of” were read as a reference to “on or after the later of”, the adjusted purchase price of a taxpayer’s interest in the annuity contract at a particular time shall be the greater of (a) the aggregate of (i) the amount that would be determined in respect of that interest under paragraph (3)(c), (d) or (e), as the case may be, if the date referred to therein was the tax anniversary date of the contract and not the date the annuity payments commence, and (ii) the adjusted purchase price that would be determined in respect of that interest if the expression “before that time” in the descriptions of A, B, C, D and H in the definition adjusted cost basis in subsection 148(9) of the Act were read as “before that time and after the tax anniversary date”; and (b) the amount determined under paragraph (2)(b) in respect of that interest. [NOTE: Application provisions are not included in the consolidated text; see relevant amending Acts and regulations.] SOR/82-499, s. 1; SOR/82-874, s. 1(E); SOR/83-865, s. 1; SOR/2001-216, s. 10(F); SOR/2011-188, s. 6; 2014, c. 39, s. 79