I-3 - Taxation Act

Section 977 Disposition versions

2006-03-01

977. In computing the adjusted cost basis of a policy to a policyholder, where all or any part of the reserves of an insurer in respect of the life insurance policy vary with the fair market value of the property of a segregated fund, the following rules apply:

(a)  an amount paid by the policyholder or on his behalf as premiums under the policy or to acquire an interest therein is deemed not to be so paid to the extent that the insurer uses such amount to acquire property for the purposes of the segregated fund; and

(b)  any transfer by the insurer of property derived from the segregated fund that results in an increase in the portion of its reserves in respect of the policy that do not vary with the fair market value of the property of the fund is deemed to be a premium paid by the policyholder under the policy.

1972, c. 23, s. 708; 1986, c. 19, s. 180; 1996, c. 39, s. 273.