63 (1) Every life insurance corporation that carries on business in Ontario at any time in a taxation year shall pay a tax under this section for the year equal to the amount, if any, by which “A” exceeds “B” where, “A” is equal to 1.25 per cent of that proportion of its taxable paid-up capital for the year as determined under this section that the number of days in the year is of 365, and “B” is the amount of tax payable by the corporation under Divisions B and C for the year.  2007, c. 11, Sched. A, s. 63 (1). Taxable paid-up capital, resident corporation (2) For the purposes of this section, the taxable paid-up capital for a taxation year of a life insurance corporation that is resident in Canada at any time in the year is the amount, if any, calculated using the formula, A × [(B × C/D) + E – F] in which, “A” is the corporation’s Ontario domestic factor for the year, “B” is the sum of, (a) its capital for the year as determined under subsection (4), and (b) the amount, if any, determined under subsection (6) for the year in respect of the capital of its foreign insurance subsidiaries, if any, “C” is the corporation’s Canadian reserve liabilities as at the end of the year, “D” is the sum of, (a) its total reserve liabilities as at the end of the year, and (b) the amount, if any, determined under subsection (7) in respect of the total reserve liabilities of its foreign insurance subsidiaries, if any, “E” is the amount determined for the year in respect of the corporation under subparagraph 190.11 (b) (ii) of the Federal Act, and “F” is its capital allowance for the year as determined under this section. 2007, c. 11, Sched. A, s. 63 (2). Taxable paid-up capital, non-resident corporation (3) For the purposes of this section, the taxable paid-up capital for a taxation year of a life insurance corporation that throughout the year is not resident in Canada is the amount, if any, calculated using the formula, A × (G – F) in which, “A” has the meaning ascribed by subsection (2), “G” is its capital for the year as determined under subsection (5), and “F” has the meaning ascribed by subsection (2). 2007, c. 11, Sched. A, s. 63 (3). Capital, resident life insurance corporation (4) For the purposes of this section, the capital for a taxation year of a life insurance corporation that is resident in Canada at any time in the year is the amount, if any, determined as of the end of that year by which “H” exceeds “I” where, “H” is the sum of, (a) the amount of its long-term debt, and (b) the amount of its capital stock or, in the case of a corporation incorporated without share capital, the amount of its members’ contributions, plus the amount of its retained earnings, contributed surplus and any other surpluses, and “I” is the sum of, (a) the amount of its deferred tax debit balance or future tax assets, and (b) the amount of any deficit deducted in computing its shareholders’ equity.  2007, c. 11, Sched. A, s. 63 (4). Capital, non-resident life insurance corporation (5) For the purposes of this section, the capital for a taxation year of a life insurance corporation that is not resident in Canada at any time in the year is the amount, if any, calculated as of the end of that year using the formula, J + K + L + M in which, “J” is the greater of, (a) the amount, if any, by which its surplus funds derived from operations, as of the end of the year, exceeds the sum of all amounts each of which is, (i) an amount on which it was required or would have been required, but for subsection 219 (5.2) of the Federal Act, to have paid tax under Part XIV of the Federal Act for a previous taxation year, less the portion, if any, of the amount on which tax was payable, or would have been payable, described in subparagraph 219 (4) (a) (i.1) of that Act, or (ii) an amount on which it was required or would have been required, but for subsection 219 (5.2) of the Federal Act, to have paid tax under subsection 219 (5.1) of that Act for the year because of the transfer of an insurance business to which subsection 138 (11.5) or (11.92) of that Act applied, and (b) its attributed surplus for the year, as determined under subsection 2400 (1) of the Federal regulations, “K” is the amount of its other surpluses, if any, relating to its insurance businesses carried on in Canada, “L” is the amount of its long-term debt that may reasonably be regarded as relating to its insurance businesses carried on in Canada, and “M” is the amount, if any, by which “N” exceeds “P” where, “N” is the amount of its reserves for the year, other than its reserves in respect of amounts payable out of segregated funds, that may reasonably be regarded as having been established in respect of its insurance businesses carried on in Canada, and “P” is the sum of, (a) all amounts each of which is the amount of a reserve, other than a reserve described in subparagraph 138 (3) (a) (i) of the Federal Act, to the extent that it was included in the amount of “N” for the year and was deducted in computing its income for the year, (b) all amounts each of which is the amount of a reserve described in subparagraph 138 (3) (a) (i) of the Federal Act, to the extent that it was included in the amount of “N” for the year and was deductible under subparagraph 138 (3) (a) (i) of the Federal Act in computing its income for the year, and (c) all amounts each of which is the amount outstanding at the end of the year, including any accrued interest, in respect of a policy loan within the meaning assigned by subsection 138 (12) of the Federal Act that was made by the corporation, to the extent that it was deducted in computing the amount determined under clause (b). 2007, c. 11, Sched. A, s. 63 (5). Capital, foreign insurance subsidiaries (6) The amount determined for a taxation year in respect of the capital of the foreign insurance subsidiaries of a particular life insurance corporation is the sum of all amounts each of which is the amount determined in respect of a foreign insurance subsidiary of the particular corporation equal to the amount, if any, by which “Q” exceeds “R” where, “Q” is the amount that would be the capital of the subsidiary for its last taxation year ending at or before the end of the particular corporation’s taxation year, if the subsidiary were a life insurance corporation resident in Canada at any time in that year, and “R” is the sum of all amounts each of which is, (a) an amount included in “Q” for the year in respect of a share of the subsidiary’s capital stock or its long-term debt that was owned by, (i) the particular corporation, (ii) a
subsidiary of the particular corporation, (iii) a
corporation that is resident in Canada, carried on a life insurance business in Canada at any time in its last taxation year ending at or before the end of the particular corporation’s taxation year and that is, (A)  a corporation of which the particular corporation is a subsidiary, or (B)  a subsidiary of a corporation described in sub-subclause (A), or (iv) a subsidiary of a corporation described in subclause (iii), or (b) an amount included in “Q” for the year in respect of any surplus of the subsidiary contributed by a corporation described in any of subclauses (a) (i) to (iv), other than an amount included under clause (a).  2007, c. 11, Sched. A, s. 63 (6). Total reserve liabilities, foreign insurance subsidiary (7) The amount determined for a taxation year for the purposes of subsection (2) in respect of the total reserve liabilities of the foreign insurance subsidiaries of a particular life insurance corporation is the sum of all amounts each of which would be the total reserve liabilities of a foreign insurance subsidiary of the particular corporation as at the end of the subsidiary’s last taxation year ending at or before the end of the particular corporation’s taxation year, if the subsidiary were required by law to report to the Superintendent of Financial Institutions for that year.  2007, c. 11, Sched. A, s. 63 (7). Capital allowance (8) For the purposes of this section, the capital allowance for a taxation year of a life insurance corporation that carries on business in Canada at any time in the year is the sum of, (a) $10 million; (b) one-half of the amount, if any, by which the lesser of $50 million and its taxable capital employed in Canada for the year exceeds $10 million; (c) one-quarter of the amount, if any, by which the lesser of $100 million and its taxable capital employed in Canada for the year exceeds $50 million; (d) one-half of the amount, if any, by which the lesser of $300 million and its taxable capital employed in Canada for the year exceeds $200 million; and (e) three-quarters of the amount, if any, by which its taxable capital employed in Canada for the year exceeds $300 million.  2007, c. 11, Sched. A, s. 63 (8). Exception (9) Despite subsection (8) and subject to subsections (10), (11) and (12), if a life insurance corporation is related at the end of a taxation year to another life insurance corporation that carries on business in Canada, its capital allowance for the year is nil.  2007, c. 11, Sched. A, s. 63 (9). Allocation, related group (10) A life insurance corporation that carries on business in Canada at any time in a taxation year and is related at the end of the year to another life insurance corporation that carries on business in Canada may file with the Ontario Minister, on behalf of the related group of life insurance corporations of which the corporation is a member, an agreement under which an amount that does not exceed the sum of the following amounts is allocated for the year among the members of the related group: 1. $10 million. 2. one-half of the amount, if any, by which the lesser of the following amounts exceeds $10 million: i. $50 million, and ii. the sum of all amounts each of which is the taxable capital employed in Canada of a life insurance corporation for the year that is a member of the related group. 3. one-quarter of the amount, if any, by which the lesser of the following amounts exceeds $50 million: i. $100 million, and ii. the sum of all amounts each of which is the taxable capital employed in Canada of a life insurance corporation for the year that is a member of the related group. 4. one-half of the amount, if any, by which the lesser of the following amounts exceeds $200 million: i. $300 million, and ii. the sum of all amounts each of which is the taxable capital employed in Canada of a life insurance corporation for the year that is a member of the related group. 5. three-quarters of the amount, if any, by which the sum of all amounts each of which is the taxable capital employed in Canada of a life insurance corporation for the year that is a member of the related group exceeds $300 million.  2007, c. 11, Sched. A, s. 63 (10). Allocation by Minister (11) The Ontario Minister may request a life insurance corporation that carries on business in Canada at any time in a taxation year and that, at the end of the year, is related to another life insurance corporation that carries on business in Canada to file with the Ontario Minister an agreement referred to in subsection (10) and, if the corporation does not file the agreement within 30 days after receiving the request, the Ontario Minister may allocate among the members of the related group of life insurance corporations of which the corporation is a member for the year an amount not exceeding the sum of the amounts in respect of the related group under paragraphs 1 to 5 of subsection (10).  2007, c. 11, Sched. A, s. 63 (11). Same (12) For the purposes of this section, the least amount allocated for a taxation year to a member of a related group under an agreement described in subsection (10) or by the Ontario Minister under subsection (11) is the capital allowance for the year of that member.  2007, c. 11, Sched. A, s. 63 (12). Taxable capital employed in Canada (13) For the purposes of this section, the taxable capital employed in Canada for a taxation year of a life insurance corporation is determined as follows: 1. If the life insurance corporation is resident in Canada at any time in the year, its taxable capital employed in Canada for the year is the amount calculated using the formula, (B × C/D) + E in which “B”, “C”, “D” and “E” are the amounts determined under subsection (2) in respect of the corporation for the year. 2. If the life insurance corporation is not resident in Canada at any time in the year, its taxable capital employed in Canada for the year is the amount of its capital for the year, as determined under subsection (5). 2007, c. 11, Sched. A, s. 63 (13). Application of Federal Act (14) Subsections 181 (3) and (4) and 190.15 (5) and (6) of the Federal Act apply with necessary modifications for the purposes of this section and, in the application of those subsections, (a) subsection 1 (7) of this Act does not apply; (b) references to Part I.3 of the Federal Act shall be read as references to this section; and (c) the references in subsections 190.15 (5) and (6) of the Federal Act to a corporation’s capital deduction shall be read as references to its capital allowance as determined under this section.  2007, c. 11, Sched. A, s. 63 (14). Definitions (15) In this section, “foreign insurance subsidiary” means, in respect of a particular life insurance corporation at a particular time, a non-resident corporation that, (a) carried on a life insurance business throughout its last taxation year ending at or before that time, (b) did not carry on a life insurance business in Canada at any time in its last taxation year ending at or before that time, and (c) is at that time, (i) a subsidiary of the particular life insurance corporation, and (ii)  not a subsidiary of any corporation that is resident in Canada that carried on a life insurance business in Canada at any time in its last taxation year ending at or before that time and that is a subsidiary of the particular life insurance corporation; (“filiale d’assurance étrangère”) “long-term debt” means subordinated indebtedness, within the meaning assigned by the Insurance Companies Act
(Canada), evidenced by obligations issued for a term of not less than five years; (“passif à long terme”) “reserves” means, in respect of a life insurance corporation for a taxation year, the amount at the end of the year of all of the corporation’s reserves, provisions and allowances, other than allowances in respect of depreciation or depletion, and includes any provision in respect of deferred taxes or future tax liabilities; (“réserves”) “subsidiary” means, in respect of a corporation that in this definition is referred to as the “parent corporation”, a corporation not less than 90 per cent of the issued and outstanding shares of each class of the capital stock of which belong to, (a) the parent corporation, (b) a corporation that is a subsidiary of the parent corporation, or (c) any combination of corporations each of which is a corporation described in clause (a) or (b); (“filiale”) “Superintendent of Financial Institutions” means the Superintendent of Financial Institutions appointed under the Office of the Superintendent of Financial Institutions Act (Canada); (“surintendant des institutions financières”) “surplus funds derived from operations” means, in respect of a life insurance corporation as of the end of a taxation year, the amount that would be its surplus funds derived from operations at that time under subsection 138 (12) of the Federal Act, computed as if no tax were payable under Part I.3 or VI of that Act for the year. (“fonds excédentaire résultant de l’activité”)  2007, c. 11, Sched. A, s. 63 (15). Division E — Capital Tax Subdivision a —Liability for Capital Tax