By: Florence Marino B.A., LL.B., TEP | Vice President, Tax & Estate Planning
It has been the CRA’s long-standing position that trust-owned life insurance may be distributed to a capital beneficiary of a trust pursuant to subsection107(2) of the Act in satisfaction of all or part of their capital interest in the trust at the policy’s adjusted cost basis.
In the spring, CALU orally confirmed with the CRA that this position remained unchanged (See: Roll-out of life insurance policy from a trust – Undisturbed – Tompkins Insurance) notwithstanding unfavourable responses in several technical interpretations involving the transfer of a life insurance policy as a dividend in-kind through a trust. (See: Imperfect conduit – Transfer of a life insurance policy as a dividend-in-kind via a trust – Tompkins Insurance).
At the APFF Conference, Financial Strategies and Instruments Round Table on October 10, 2024, this long-standing position has been reconfirmed in writing by the CRA.
Useful.
FOOTNOTE:
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