I-3 - Taxation Act

Section 851.20 Disposition versions

2009-05-15

851.20. If, at a particular time, the holder of a segregated fund policy withdraws all or part of the holder’s interest in that policy, and the trustee of the segregated fund trust relating to that policy makes, in relation to the withdrawal, a valid election under subsection 4 of section 138.1 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) after 19 December 2006 in respect of a capital property of the trust, the capital property is deemed to have been disposed of on the date designated by the trustee in respect of the capital property in the election for proceeds of disposition equal to the amount designated by the trustee in respect of the capital property in the election in accordance with that subsection 4, which amount is to be reduced to the greater of or increased to the lesser of, as the case may be, the fair market value of the capital property on the date of the disposition and the adjusted cost base to the trust of the capital property on that date, and to have been reacquired by the trust immediately after at a cost equal to those proceeds.

Chapter V.2 of Title II of Book I applies in relation to an election made under subsection 4 of section 138.1 of the Income Tax Act or in relation to an election made under this section before 20 December 2006.

1978, c. 26, s. 165; 1996, c. 39, s. 273; 2001, c. 53, s. 173; 2009, c. 5, s. 353.

2006-03-01

851.20. (1)  Where, at a particular time after 1977, the holder of a segregated fund policy withdraws all or part of his interest in that policy, the trustee of the segregated fund trust relating to that policy may elect, in prescribed form and prescribed manner, to treat any capital property of the trust as having been disposed of on the day designated by him for proceeds equal to the amount referred to in subsection 2 and to have been reacquired by the trust immediately thereafter at a cost equal to those proceeds.

(2)  The amount referred to in subsection 1 is that designated by the trustee and that is:

(a)  the fair market value of the capital property on the day of disposition;

(b)  the adjusted cost base to the trust of the capital property on the day of disposition; or

(c)  an amount that is neither greater than the greater of nor less than the lesser of the amounts determined under paragraphs a and b.

1978, c. 26, s. 165; 1996, c. 39, s. 273; 2001, c. 53, s. 173.