INDEX 21-year deemed disposition rule, 328 329 Crummey trust and, 353 A Accounting for life insurance, 224 226 Accounting standards, 71 72 Accrual reporting annuities, 431 433 keyperson insurance strategy and, 229 232 pro-rating, 11 reduction by NCPI, 10 11, 84 85 Adjusted purchase price, 442, 457, 459 Advanced death benefit, 67 68 Aggressive tax planning, 147 148 Annuitant death of, 452 454, 480 defined, 424, 446 Accrual taxation, 7 8, 431 433 annuities introduction of, 431 433 Annuities, see also Annuity contracts, annuity contracts Charitable annuities, Deferred post-1989 contracts, 440 454 annuities, Insured annuities, Segregated funds, Structured pre-1990 contracts, 454 459 settlements deferred annuities, 463 464 accrual taxation rules, 431 433 contracts last acquired after exempted, 432 December 31, 1989, 466 deemed disposition rules, 482 contracts last acquired prior to April 1, 1977, 463 465 deferred, 462 463 contracts last acquired after defined, 427 March 31, 1977 and before general, 1, 427 January 1, 1990, 465 466 grandfathered, 432 Accumulating fund, 7 11, 85, 449 immediate, 439 Adjusted cost base, 3, 4, 5, 6, 7, 8, income 10 15 requirement to report, 431 calculation of, 84 90 life annuities, 427, 428, 429, 439 examples of, 84 90 non-prescribed, 464, 466, 485 defined, 3, 4, 84 90 prescribed, 440 442, 464 465 formula, 85 86 qualifying as structured settlement, grandfathered policies, 11, 12, 13 506 733
Annuities (cont d) adjusted cost basis, 449 452 reporting requirements, 440, 462 overview, 447 segregated fund, 428 proceeds of disposition, taxation of 448 449 accrual taxation, 431 433 what constitutes, 448 early, 428 430 overview, 440 Carter Commission, 430 431 payments, taxation of, 441 443 tax reform and, 433 434 prescribed annuity contracts, 443 447 term annuities, 427 taxation on death Annuitization, 3, 7, 11, 82, 464, 465, contract transferred to 466 beneficiary, 453 454 as disposition, 11 general, 452 Annuity contracts, see also lump sum paid to Annuities, Charitable annuities, beneficiary, 453 Deferred annuities, Insured termination of contract on annuities, Segregated funds death, 452 453 death, taxation on, 452 pre-1990 contracts contract transferred to beneficiary, contracts acquired after 453 454 December 1, 1982 and before general, 452 January 1, 1990 lump sum paid to beneficiary, accrual taxation, 458 453 adjusted cost basis, 458 termination of contract, 452 453 dispositions, taxation of, 459 general, 439 payments, taxation of, 459 income averaging annuity contracts taxation on death, 459 (IAACs), 430 431 contracts acquired before last survivor, 433, 445 December 2, 1982 payments, 441 443 accrual taxation, 455 456 prescribed annuity contracts (PACs), adjusted cost basis, 456 440 442 disposition, taxation of, 457 defined, 440 payments, taxation of, payments, 442 456 457 proceeds of disposition, 442, 447 pre-1982 unallocated income, surrenders, 464 456 taxation of taxation on death, 457 458 post-1989 contracts overview, 454 accrual taxation of, 440 441 dispositions, taxation of 734
Assignment B absolute Beneficiary general, 97 98 21-year deemed disposition rule, general rule, 98 328 329 gifts, non-arm s length transfers, Crummey trust, 353 98 99 annuity contracts tax-free rollovers, 99 105 contract transferred to, 453 454 generation transfers and death of owner, lump sum paid, intergeneration transfers, 453 100 102 capital beneficiaries, 322 inter vivos transfer to spouse/common-law partner, charity as, 406, 407, 412, 415, 416 103 children, 177 178, 181 transfer out of a personal trust, common-law partner, 177 178 104 105 annuity contracts, 441 447 transfer to spouse/common-law corporation partner at death, 103 104 business insurance trust, 335 336 business loan protection, 227 229 defined, 315, 317 deductibility, 227 228 grandchildren, 177 178, 181 disposition, as, 227 228 irrevocable charity, to, 417 418 creditor protection, 180 184 collateral life insurance deduction, 493 494 intergenerational transfers, 185 186 exempt life insurance policy, 184 185 notice of transfer, 185 leveraged insured annuities minor, 176, 318, 330 collateral life insurance deduction, partnership property, 382 383 493 personally-owned insured annuities, partnerships, 399 479 481 structured settlements, 510 private corporation business insurance trust, 335 336 Attribution rules credit to capital dividend account, corporate, 116 117 197 intergenerational transfers, 185 186 Quebec, 176 spousal, 103 same-sex partners, 181 trusts, 324 segregated funds, 515 516 shareholder designated, on corporate-owned life insurance, 213 214 spouse, 181 735
Beneficiary (cont d) term-to-100 life insurance policy, 478 Index grandfathering (G2 policies), 22, 28 30 trusts, 315 Bill C-139, see Notice of Ways and Means Motion and Bill C-139 withdrawal rights Borrowing, see also Business loan Crummey Trust, 353 protection, Keyperson insurance protection Benefits, see also Death benefit employees group life insurance premiums, 212 213 premiums paid by corporation, 213 shareholders beneficiary designation on corporate-owned life insurance, Business loan protection 213 214 assignment of, 228 229 living buyout, 157 163 deductibility of, 228 premiums paid by corporation, disposition, as, 228 229 213 general, 137 leveraged insured annuity, see Insured annuities, leveraged insured annuities leveraged life insurance programs, see Leveraged life insurance programs benefits of strategy, 229 transfer of ownership of corporate-owned insurance, deductibility, 229 214 215 defined, 227 specified insurance benefit, 71 exempt policy, 229 taxable conversion benefit, 70 generally, 227 228 Bill C-43, 21 30 implementation, 228 August 29, 2014 draft legislation, 21 private corporation, 229 changes to 8 percent rule, 25 26 tax rules, 228 229 changes to 250 percent test, 26 Buy/sell arrangements, see also changes to actuarial assumptions Shareholders, Stop-loss rules and reserve methods, 23 24 bare trustee, 264 changes to calculation of ACB of business insurance trust and, policy, 27 335 336 changes to capital portion of annuity capital dividend account, use of, payments from PACs, 25 262 263 changes to dispositions, 28 corporate- vs. personally-owned life changes to joint policies, 26 27 insurance, 233 237 changes to NCPI calculation, 24 25 allocation of cost of premiums, effective date, 21 234 exempt test, 22 23 creditor protection, 235 236 736
Buy/sell arrangements (cont d) business insurance trusts, 335 336 ease of administration, 234 share redemption method, family law (Ontario), 234 235 245 250 policing of policy premiums, 234 use of, 262 263 potential transfer of ownership, collateral assignment and, 204 205, 236 237 224 tax complexity, 235 corporate-owned insured annuity, tax leverage, 233 485 eligible dividend tax regime, corporate partners 263 264 proceeds of insurance policy, generally, 232 378 381 split-dollar insurance arrangements, creditor insurance arrangements and, 295 313 203 structuring agreement defined, 203 corporation share redemption donations method, 233, 245 250 publicly-traded securities, 411 stop-loss rules and, 246 estate planning and holding crisscross purchase method, companies, 206 238 242 hybrid (combination) method, keyperson strategy and, 229 231 250 255 leverage insurance and, 153 154 stop-loss rules, 256 262 leveraged insured annuity (LIA), optimization clauses, 255 256 490 overview, 237 life insurance capital dividend promissory note method, 242 245 account, see Life insurance capital dividend account share redemption method, 245 250 miscellaneous issues, 211 212 non-residents, 206 C payment of capital dividend, Canada United States Income Tax 209 210 Convention (1980), 355, 368 planning to maximize, 206 209 Capital cost allowance private company shares, gift of, 412 recapture of, 176 177, 337, 410 private corporation, of Capital dividend account (CDA), defined, 209 210 197 199, see also Capital dividend stop-loss rules, 260 262 election, Dividends fifty percent solution, 261 262 business loan protection strategy and, 227 spousal rollover, 260 261 buy/sell agreements Capital dividend election, 210 211 737
Capital gains Carter Commission Report, 2, 6, 430 deemed disposition, 176 Cash surrender value (CSV), 83 donations and, 410 annuity contracts, 441 publicly-traded securities, 411 borrowing against policy, 137 exemption, 114 116, 176 defined, 83 lifetime capital gains, 114 116 full surrender, 90 91 qualified farm property, 176 leveraged insured annuities, qualified small business corporation 494 495 shares, 176 partial surrenders, 91 93 retirement compensation RRSP owning life insurance policy, arrangements, 278 343 344 segregated funds, 436 437 spousal trusts, 337 share redemption agreements, transfers 245 250 amalgamations, 133 134 fifty percent solution, 247, 257, corporate-owned insurance 261 262 transferred to shareholder, spousal rollover, 261 120 122 trust property, 315 intercompany shareholdings, Capital losses 125 130 retirement compensation non-arm s length, 98 arrangements, 278 partner to partnership, 383 segregated funds, 436 437, 517 partnership to partner, 382 share redemption agreement, shareholder to corporation, 245 250 130 133 fifty percent solution, 247, sister companies, 123 130 261 262 wind-ups, 134 spousal rollover, 261 term-to-100 policies, 486 trusts Certificate of Compliance, 366 life insurance, 315 Charitable annuities, see also Capital property Annuities, Annuity contracts, charitable donations of, 410 Deferred annuities, Insured deemed disposition of, 176 annuities, Segregated funds depreciable, 176, 410 general, 469 emigration, 360 362 issued after Dec. 20, 2002, 472 476 trusts further technical clarifications, 474 476 life insurance, 322, 326 Income Tax Technical News No. Capital replacement, 423 424 26, 473 474 738
Charitable annuities (cont d) disbursement quota, 406 407 split-receipting, 472 473 10-year gifts, 407 issued before Dec. 21, 2002, donation tax credit, 407 408 469 472 donations benefits of structure, 472 capital property, 410 charitable foundations, and, 472 election, 410 example of how they work, 470 in year of death, 410 financial realities, 471 life insurance, see Gifts general description, 469 470 limits, 410 variations, fixed term annuities, mutual fund, units of, 411 471 non-arm s length, 412 IT-110R3, 404, 470 publicly-listed securities, 411 IT-111R2, 469 472 segregated fund, interest in, Mortality Tables, 470, 475 424 426 Charitable foundations, 472 segregated funds, gifts of, defined, 403 424 426 disbursement quota, 406 407 shares, 422 private foundations, 403 404 stock options, 411 public foundations, 403 404 tax shelter arrangements, 413 Charitable giving, see also excepted gifts, 412 Charitable annuities, Charity, Gifts federal tax credit, 407 defined, 403 406 gifts, see Gifts general, 403 loan back transactions, 412 split-dollar insurance arrangements, non-qualifying security, 412 311 312 reduced inclusion rate Charitable organization publicly-listed securities, 408 defined, 404 stock options, 411 Charity, see also Charitable RRSP or RRIF insurance, 407 annuities, Charitable giving tax incentives, 407 413 anti-avoidance rules, 411 413 annual limits, 410 excepted gifts, 412 anti-avoidance rules, 411 413 loan back transactions, 412 Bill C-43 changes, 408 non-qualifying securities, 412 general, 407 beneficiary, as, 412 tax shelter donation arrangements, capital replacement, 423 424 413 corporate donations, 408 Child defined, 403 404 defined, 100 101 739
Civil Code (Quebec) collateral assignment (hypothecation), 204 Collateral insurance, see Assignment of policy Index insured annuities capital dividend account, 485 cash flow example while living, 483 deemed disposition on death, 480 general, 479 tax implications at death, 480, 485 487 valuation, 485 487 Common-law partner annuity contracts rollover, 449 transfer, 449 multi-life insurance, 63 65, 101, deferred annuity 387, 389 rollover, 463 retirement compensation defined, 181, 446 arrangement inter vivos transfers, 103 deeming rules, 287, 290 292 rollover, 177 share redemption agreements, annuity contracts, 449 256 257, 262 deferred annuity, 463 shareholder designated as beneficiary, 212 share redemption strategies, 260 shares, see Shares transfer of property, 337 split-dollar insurance arrangement, Corporate attribution rules, 116 117 see Split-dollar insurance arrangements Corporate investment financial considerations, 269 stop-loss rules, see Stop-loss rules impact of corporation owning cash transfer of policies, 118 134 value life insurance policy, 268 269 amalgamations, 133 introduction, 268 between related corporations post-mortem tax considerations in intercompany shareholdings, comparing alternatives, 270 273 125 130 Corporate-owned insurance, see sister companies, 123 125 also Buy/sell arrangements, Splitdollar insurance arrangements, Stop- corporation to shareholder, corporation to insured, 214 215 loss rules 120 122 amalgamations, 133 partner to partnership, 383 charitable gifts by partnership to partner, 382 deductibility, 215 shareholder to corporation, deemed retirement compensation 130 133 arrangement, 231 wind-ups, 134 group life insurance, 212 transfers on death deductibility, 212 to common-law partner, 337 740
Corporate-owned insurance (cont d) to spouse, 337 United States estate tax, 345 wind-ups, 134 Index capital dividend account and, 153 154 interest deductibility, 152 153 leveraged insurance and, 153 Corporation, see also Private corporation, Retirement Creditor compensation arrangements (RCA), protection of Supplementary Executive Retirement buy/sell agreements, 235 236 Plan (SERP) protection from, 179, 180 181 annuity income partners, 401 reporting requirements, 440 441 Creditor insurance arrangements, charitable donations, 407 413 203 corporate partner capital dividend account and, 203 death of, 379 proceeds of insurance policy, D 379 381 Death benefit, 8 9, 12 16 sole shareholders, 379 advanced, 67 68 financial statements, 224 226 capital gains exemption, 114 116 leveraged insurance arrangements gifts of life insurance to charities, living buyout, 157 163 420 facts, 157 prescribed increase in, 13 structure, 157 158 defined, 13 prescribed premium, 14 tax risks defined, 14 shareholder benefit issue, 159 split-dollar insurance arrangements loan outstanding, 159 161 corporate-owned death benefit, 297 299 time of repayment, 161 162 employee/shareholder owned death benefit, 295 297 pay a bonus, 154 157 universal life insurance, 55 62 facts, 154 Deductibility structure, 154 assignments tax risks generally, 215 RCA rules, 155 157 historical perspective, 218 219 retirement redemption, 151 154 Interpretation Bulletin IT-309R2, facts, 151 222 223 structure, 151 152 related matters, 223 224 tax risks s. 20(1)(e.2), 219 222 741
Deductibility (cont d) Interpretation Bulletin IT- amount deductible, 220 222 309R2, 222 223 requirements for deductibility, related matters, 223 224 219 220 creditor s life insurance, 223 business loan protection generally, 212 assignment of, 228 229 group life insurance, 212 213 charitable gifts registered life insurance policy, corporate-owned insurance, 216 214 215 Registered Retirement Savings Plans (RRSPs), 216 donations s. 20(1)(e.2), 219 222 corporations, 406 409 amount deductible, 218 222 gifts, 217 requirements for deductibility, group life insurance, 212 213 219 220 interest retirement compensation leveraged insured annuity, arrangements 489 490 employer contributions, 277 leveraged life insurance program qualifying employee corporate applications contributions, 277 retirement redemption, shareholder contributions, 277 151 154 split-dollar arrangements immediate borrowing taxable benefit, 301 304 application, 164, 167, 169 Deductions collateral loan to invest, collateral life insurance deduction, 163 165 493 494 policy loan, 168 170 retirement compensation individual retirement arrangements arrangement, 151 employer contributions, 277 policy loan, 93 97 qualifying employee segregated funds, 424 426 contributions, 277 keyperson protection, 229 232 Deferred annuities, 461 467, see NCPI also Annuities, Annuity contracts, Charitable annuities, Insured from ACB, 84 87 annuities, Segregated funds premiums accumulating fund, 463 charitable gift, 217 accrual taxation, 463 collateral insurance annual reporting, 463, 465 generally, 217 annuitant, 461 historical perspective, 218 219 death of, 461, 466 742
Deferred annuities (cont d) Guaranteed Investment Certificates contracts last acquired after (GICs) and, 461 December 31, 1989 last acquired, 463 accrual taxation, 466 life contingency, 461 annual reports, 466 life insurance, as, 461 annuitization, 466 maturity date, 461 death of annuitant, 466 partial surrender, 464, 465, 466 policy gains, 466 policy gains, 464, 465, 466 surrender, 466 policy loan, 462, 463 partial, 466 prescribed annuity, 432 434, contracts last acquired after March 440 443, 464, 465 31, 1977 and before January 1, 1990 defined, 432, 702 adjusted cost base, 465 payments, 442 annual reports, 465 registered, 466 467 annuitization, 465 466 surrender, 464, 465, 466 death of annuitant, 466 transfer, 463 general, 465 Deferred Profit Sharing Plan, 275, policy gains, 465 430, 436 prescribed annuity, 465 Demutualization surrender, 465 defined, 70 partial surrender, 465 tax regime, 70 71 contracts last acquired prior to April Dependants, 175 176 1, 1977 accrual taxation, 463 464 Disposition, see also Proceeds of disposition, Surrender of policy adjusted cost base, 464 annuitization as, 11 annuitization, 464 annuity contracts, taxation of, death of annuitant, 464 428 433, 447, 452 general, 463 change of trustees, 329 policy gains, 463 deemed disposition on death, 3 4 prescribed annuity, 464 corporate-owned insured annuity, surrender, 464 485 487 partial surrender, 464 deferred annuity, 463 defined, 462 463 funding tax liability, 176 disposition, 462 463 leveraged insured annuity, exceptions, 463 494 495, 498 general, 461 462 non-residents 743
Disposition (cont d) term insurance enhancements, see clearance requirements, Term insurance 364 368 Dividends personally-owned insured annuity capital dividend account, see Capital non-prescribed, 479 dividend account prescribed, 479 capital dividends, 197 199 policy dividends, 97 buy/sell agreement valuation, 107 113 business insurance trust, deemed disposition rules on 335 336 emigration, 360 362 share redemption method, exceptions, 360 361 245 248 deferred annuities, 463 defined, 197 defined, 77 80 election, 197 exclusions, 80 83 leveraged insured annuity, 489 490 general rules, 76 payment of, 209 210 non-residents declaration, 209 210 clearance requirements, 364 368 deemed, 245 dual residents, 363 eligible dividend tax regime, general, 363 262 263 taxable, 363 participating whole life insurance, tax treaties, impact of, 368 see Participating whole life other properties deemed disposed of, insurance 114 policy, see Policy dividend terminology, 76 tax-free, 197 transfer of ownership, 97 Double taxation trusts dual residents, 363 364 21-year deemed disposition rule, non-united States persons, 354 357 328 329 segregated funds, 520 under promissory note method, share redemption agreements, 117 118 245 250 Dividend options United States estate tax, 346 348 accumulate at interest, 52 Draft legislation of August 29, 2014, cash, 52 see Bill C-43 exempt policies, 179 E purchase bonus paid up additions, 53 Election reduce premiums, 52 capital dividend election, 197 199 744
Election (cont d) charitable donations capital property, 410 out of spousal rollover, 103 Index RRSPs, 177 share redemption agreement, 245 246 United States estate taxes, see United States tax considerations and estate planning Emigration, 360 363 corporate-owned policies, 362 Exempt policy, see also Disposition deemed disposition, 360 363 business loan strategy and, 228 229 fair market value, 360 cash values of, 179 immigration, 362 collateral assignment, 179 individuals, 361 362 dividend options, 184 property subject to, 360 361 exempt test, 186, see also Exempt reporting requirements, 362 363 test tax, 360 gifts to charities, 412 taxable Canadian property, 361 intergenerational transfers, 185 186 Employee inter vivos family trusts, 185 186 benefits, 212 215 introduction of, 7, 8 10 group life insurance premiums, keyperson insurance strategy and, 212 213 229 premiums paid by corporation, leveraging, 184, see also Leveraged 213 life insurance programs split-dollar insurance arrangements non-residents employee-owned death benefit, clearance requirements, 364 368 295 297 policy dividend, 184 Estate policy loans, 184 collateral insurance, 179 probate fees and, 178 create, 179 retirement compensation equalization, 180 arrangements, 337 estate taxes, 178 split-dollar arrangements, 187 funding deemed disposition, 176 supplementary executive retirement plans, 272 273 other costs, 178 life insurance funded strategies planning front end leveraged RCA capital dividend account and, 195, (FELRCA), 288 196, 197 199 leveraged life insured SERP preservation of, 176 strategy, 284 probate fees, 178 life insured SERP strategy, 284 replenishing, 179 split-dollar life insured strategy, RRIFs, 177 286 745
Exempt policy (cont d) beneficiary designated, 390 tax exempt accumulations, 184 trustee d, 389 390 taxation of, 75 105 partnership purchase of interest, term-to-100, 478 393 396 withdrawals, 184 corporate partners, 393 394 Exempt test, see also Bill C-43 individual partners, 391 393 background, 16 18 surviving partners purchase interest, 394 395 draft legislation of August 23, 2013, 20 21 shares held by spousal trust, 113 114 federal budget of 2012, 18 20 transfers between intercompany F shareholdings, 125 130 wind-ups, 134 Fair market value cash surrender value and, 110, Family business succession planning 111 113 introduction, 264 265 charitable donations role of life insurance in common capital property, 410 family business succession plans, 265 268 corporate-owned insured annuity, 485 487 sale to successor during life for promissory note, 265 deemed disposition on emigration, 360 363 transfer at death to successor, 266 268 deemed disposition upon death, 107 113 use of estate freeze to transfer ownership to successor during corporate-owned life insurance on life, 266 deceased shareholder, related parties and other shareholders, 107 110 Federal budget interest in life insurance, 105 107 1968, 2 4 leveraged insured annuity, 494 495 relief for existing policies, 4 life insurance shares, 110 113 taxation of policy gains on non-qualifying security, 412 disposition, 3 4 partnership property 1977, 4 5 death of corporate partner, 378 new tax anniversary date, 5 partnerships policy loans as disposition, 5 funding buy/outs with life 1981, 5 6 insurance 2012, 18 20 criss-cross method, 387 390 Financial Accounting Standards basic, 387 Board (FASB), 225 basic with corporate partners, 388 746
Foreign life insurance excepted, 412 413, 422 foreign property reporting rules, life insurance 369 370 general, 413 415 general, 369 IT-244R3, 417 taxation of, 370 371 methods of gifting Forms bequest of proceeds, 415 416 Form T3, 524 charity-owned policy, 416 420 Form T4A, 535 assignment of policy, Form T733, 275 417 418 Form T1135, 370 benefits of, 420 Form T1161, 363 disbursement quota and 10- year gifts, 406 407 Form T2054, 210 tax consequences of transfer, Form T2062B, 366 419 420 Form T2064, 366 value of policy, 418 419 Form T2068, 366 donor-owned policy, 420 421 Form T2210, 95, 172 general, 415 Form T5008, 520 types of policies, 415 non-qualifying security, 411 413 G other insurance supported gifts, General Anti-Avoidance Rule 421 424 (GAAR), 495 497 private company shares, 422 applicability, 495 segregated funds, 424 426 defined, 495 Governance, 71 leveraged insurance arrangements Grandfathered policies, 7, 11 15 application re interest deductibility, 142 144 effects of changes made to, 11 15 general areas of concern, 144 146 stop-loss rules, 246 immediate borrowing application, tax rules, 11 12 164, 167, 169 Group life insurance premiums individual retirement application, benefits, 212 213 151 deductibility of, 215 216 Gifts Guaranteed Investment Certificates capital replacement, 423 424 (GICs), 461 charitable, see also Charity Guaranteed Investment Funds defined, 403 406 (GIFs) split-dollar policy, 405 defined, 523 524 deductibility, 217 hybrid allocation method, 524 747
Guaranteed Investment Funds Information Circular (GIFs) (cont d) IC 72-17R6, 364 time weighted units, 524 IC 89-3, 105, 106, 107, 108, 109, 118, 122, 126, 131, 382, 419, 645 H Insured History of life insurance taxation, 1 30 defined, 178, 183 Insured annuities, see also Holding companies, 206, 207, 235, Annuities, Annuity contracts, 311 Charitable annuities, Deferred split-dollar insurance arrangements, annuities, Leveraged insured 311 annuities, Segregated funds Hypothecation, 204 advantages, 478 annuity characteristics, 477 I charitable context, 503 Immigration, see Emigration corporate-owned Income accounting for, 487 488 accrued, 431 433 advantages, 488 calculation of, 431 432 capital dividend account, 485 defined, 432 cash flow example, 483 485 partnerships, 375 general, 483 unallocated, 455, 456 planning considerations, 488 tax implications at death, Income averaging annuity contracts 485 487 (IAACs), 430 431 defined, 477 Income Tax Act disadvantages, 478 excerpts, 661 700 insurance characteristics, 477 478 Income Tax Act Regulations leveraged insured annuities before excerpts, 701 732 Mar. 21, 2013 advantages, 489 Income Tax Folios general, 489 S3-F2-C1, Capital Dividends, 153, 199, 202, 380, 385, 583 general description, 489 490 S3-F6-C1, Interest Deductibility, 95, risks involved 138, 140, 141, 152, 172, 401, 492, collateral life insurance 493, 603 deduction, 493 494 S7-F1-C1, Split-receipting and deemed disposition at death, Deemed Fair Market Value, 404, 494 495 405, 473, 627 early payment penalty, 491 Income War Tax Act, 1917, 2, 428 general, 490 491 748
Insured annuities (cont d) collateral loan tied to policy, General Anti-Avoidance Rule 164 170 (GAAR), 495 497 policy loan, 171 172 interest deductibility, 491 493 partnership agreement, 399 400 interest rate fluctuations, 491 policy loan, 93 97 tax shelter rules, 497 498 segregated funds, 522 leveraged insured annuities on or rate fluctuations, 491 after Mar. 21, 2013 Intergenerational transfers, 100 102, consequences of being LIA 185 186 policy, 501 502 general, 499 International Financial Reporting Standards (IFRS), 72 life insurance policy (LIA), 499 501 International issues non-prescribed annuities, 464, 466, emigration, see Emigration 485 general, 345 owner profile, 478 non-residents, see Non-residents personally-owned United States estate taxes, see cash flow example, 479 480 United States tax considerations and estate planning general, 479 planning considerations, 480 481 Interpretation Bulletins treatment at death, 480 IT-67R3, 127 prescribed annuities, 443 447 IT-87R2, 75, 535 term-to-100 life insurance policy, IT-110R3, 404, 470 478, 486, 494 IT-111R2, 469, 470, 471, 472, 473 trusts, owned by, 482 IT-242R, 376 Interest IT-244R3, 417, 418, 547 deductibility IT-278R2, 377 IT-305R4, 341 Income Tax Folio S3-F6-C1, 492 493, 603 IT-309R2, 217, 218, 219, 220, 222, 223, 550 leveraged insured annuity, 491 493 IT-355R2, 95, 172, 554 leveraged life insurance program IT-365R2, 506, 507, 509, 513, 558 corporate applications IT-408R, 216, 343, 563 retirement redemption, IT-416R3, 565 154 155 IT-430R2, 153, 202, 203 GAAR, 142 144 IT-430R3, 153, 203, 204, 205, 224, immediate borrowing 379, 566 application, 164 IT-447, 323 749
Interpretation Bulletins (cont d) Leveraged life insurance programs IT-529, 570 corporate applications examples IT-533, 401 living buyout, 157 163 Irrevocable life insurance trusts analysis, 158 (ILIT), 178, 353 354 facts, 157 Ives Commission, 429 430 structure, 157 158 tax risks K at time of repayment, Keyperson insurance protection 161 162 benefits of strategy, 229 230, back-to-back shareholder 231 232 loan rules, 162 163 deductibility, 231 shareholder benefit issue, 159 defined, 229 use of capital dividend exempt policy, 231 account, 163 general, 229 valuation of shares, 162 implementation, 230 while loan is outstanding, identify problem, 230 159 161 initiate plan in event of death, pay a bonus, 154 157 230 analysis, 154 solve problem, 230 facts, 154 private corporation, 231 structure, 154 retirement compensation tax risks arrangement and, 291, 309-310 RCA rules, 155 157 split-dollar insurance arrangements, retirement redemption, 151 154 309 analysis, 152 tax rules, 231 facts, 151 L structure, 151 152 Lenders tax risks insurance proceeds received by, capital dividend account and, 202 205 153 154 interest deductibility, Level premium system, 41 44 152 153 Leveraged insured annuities (LIAs) exempt life insurance policy, 179 (on or after Mar. 21, 2013) GAAR concerns, 144 146 consequences of being, 501 502 immediate borrowing application defined, 499 501 example, collateral loan, 163 165 general, 499 analysis, 164 750
Leveraged life insurance leveraging indexed accounts, programs (cont d) 150 collateral insurance deduction, life expectancy, 151 165 performance of product, 149 facts, 163 use of illustrations, 149 financial risk, 165 structure, 148 149 interest deductibility, 164 tax risks structure, 163 164 GAAR, 151 immediate borrowing application 10/8 plans historical reference, interest deductibility, 151 165 173 overview, 137 148 background and legislative aggressive tax planning, 147 148 changes, 165 168 compound interest, 139 141 10/8 collateral loan tied to policy prior to 2013 budget General Anti-Avoidance Rule (GAAR), application of re analysis, 169 interest, 142 144 collateral insurance deduction, proposed legislation (2003) 170 withdrawn, 141 facts, 168 simple interest, 138 139 financial risk, 170 special rules in Quebec, 141 GAAR, 169 partnership retirement obligations, interest deductibility, 169 170 398 399 structure, 168 169 Life insurance 10/8 policy loan prior to 2013 budget assignment of, see Assignment analysis, 171 benefits of personal insurance collateral insurance deduction, creditor protection during life, 173 180 184 facts, 170 funding needs at death, 175 180 financial risks, 173 estate creation, increase or interest deductibility, 171 172 replenish, 179 180 policy loan interest, 172 estate equalization, 180 structure, 170 171 estate preservation, 176 179 individual retirement application collateral insurance, 179 example, 148 151 estate taxes, 178 facts, 148 probate fees and other estate financial risks costs, 178 179 banking risks, 150 tax liability for deemed interest rate risk, 149 150 dispositions, 176 177 751
Life insurance (cont d) Life insurance policy tax liability for registered accounting plans, 177 178 authoritative support, 224 225 protecting dependants, 175 176 financial reporting, 225 226 intergenerational transfers of, annuitized, 3 4 185 186 cash value, 301 leveraging, 184 charitable gift, as, 406 407 other personal insurance deemed disposition, see Disposition strategies, 186 187 deferred annuities, 462 policy loans, 184 defined, 1 withdrawals, 184 disposition of, see Disposition defined, 1 emigration, 360 gifts to charities, see Gifts gift, as, 414 transfer of ownership historical perspective corporate distributions, 97 conclusion, 30 general, 97 98 1968 federal budget, 2 4 general rule, 98 relief for existing policies, 4 generational transfers, 100 102 taxation of policy gains on gifts, 98 99 disposition, 3 4 intergenerational transfers, 1977 federal budget, 4 5 185 186 new tax anniversary date, 5 inter vivos transfer to policy loans as disposition, 5 spouse/common-law partner, 103 1981 federal budget, 5 6 non-arm s length, 100 Carter Commission Report, 2 tax-free rollovers, 100 introduction, 1 to spouse/common-law partner at Notice of Ways and Means death, 103 104 Motion, December 1, 1982 (Bill C-139), 7 16 Life insurance companies pre-1968, 2 accounting standards for recognition and measurement of financial assets owned by of insurers, 72 RRSP, 343 disclosure in respect of trust, see Trusts participating and adjustable life proceeds of insurance policies, 72 received by corporate partners, impact of legislation and accounting 379 381 standards, 71 72 received by individual partners, Life insurance capital dividend 379 account (LICDA), 15 16, 199 received by lenders, 202 205 752
Life insurance policy (cont d) limited-pay whole life, 50 51 received by private corporation, participating vs non-participating, 201 39 41 received by trust, 201 202 pricing of, 41 44 reporting traditional whole life, see authoritative support, 224 225 Traditional whole life financial, 225 226 univeral life, see Universal life transfers of, 118 133 substitute life, 101 amalgamations, 133 134 term, see Term insurance between related corporations term-to-100, 22, 23, 49 50, 65, 107, intercompany shareholdings, 111, 180, 300, 304, 418, 478, 486, 125 130 494 sister companies, 123 125 universal life, see Universal life corporation to insured, 214 215 valuation of, 105 107 corporation to shareholder, variable life insurance policies, 69 120 122 Life insurance shares, 110 113 partner to partnership, 383 Limited-pay whole life insurance, partnership to partner, 382 50 51 shareholder to corporation, Lump sum payments, 506, 508 130 133 wind-ups, 134 M valuation of, 104 108 Maximum Tax Actuarial Reserve Life insurance products (MTAR), 7, 441, 452 453 advanced death benefits, 67 68 Mortality tables, 10, 33, 34, 45, 85, coverage options, 63 65 470 multi-life, 63 65 Mutual fund trusts, 438, 517, 519 private corporation situations, Mutual funds, 428, 517, 519 63 64 charitable donations of, 411 splitting of, 64 65 GIFs and, 523 524 single life and joint, 63 non-forfeiture options, see Non- N forfeiture options Net amount at risk, 58 59, 62, 85 participating policyholders, 69 71 demutualization, 70 Net cost of pure insurance (NCPI), 7 demutualization benefits tax calculation of, 10, 85 regime, 70 71 changes to calculation, 24 25 permanent, 39 47 collateral insurance and, 221 gifts to charities, 415 deduction from ACB, 85 753
Net cost of pure insurance rules prior to 2017 (G2 policies) (NCPI) (cont d) accrual taxation, 7 8 reduction of ACB by, 10 12, 85 annuitization as disposition, 11 split-dollar insurance arrangements exempt policies, 8 10 premium based on term pro-rating ACB, 11 insurance, 300 reduction of ACB by NCPI, transfers, 307 10 11 Non-arm s length transfers, 98 grandfathered policies, 15 O Office of the Superintendent of Non-forfeiture options, 65 66 Financial Institutions (OSFI), 510 automatic premium loan, 66 Options cash value, 65 dividend options, see Dividend extended term values, 66 options reduced paid-up values, 65 66 investment options, 57 Non-residents non-forfeiture options, see Nonforfeiture options Canadian purchaser, 365 367 clearance requirements, 364 368 P dual-residents, 363 364 general, 363 Partner, see also Partnership, Partnership agreement insured non-resident, 206 death of corporate partner, 378 insurer non-resident, 206 death of individual partner, 377 378 inter vivos gift or non-arm s length liability, 374 transfer, 367 proceeds of life insurance policies non-resident purchaser, 367 and non-resident spouses, 367 368 corporate partners, 379 381 tax treaties, 368 individual partners, 379 taxable dispositions, 364 retirement, 376 377 withholding tax/section 116, funding the withdrawal of, 364 368 397 400 Notice of Ways and Means Motion transferring life insurance policy to and Bill C-139, 7 16 partner, 382 383 old rules (grandfathered policies) transferring life insurance policy to pre-1982 (G1 policies) partnership, 383 effect of changes to, 12 15 Partnership, see also Partner, life insurance capital dividend Partnership agreement account, 15 16 agreement, see Partnership tax rules, 11 12 agreement 754
Partnership (cont d) creditor protection, 401 annuities funding buy/outs with life reporting requirements, 440 insurance defined, 373 choosing structure for, 386 financial statements, 224 criss-cross method, 387 390 general, 373 374 basic, 387 general taxation of, 375 378 basic with corporate partners, death of individual partner, 388 377 378 beneficiary designation, 390 death of sole shareholder of trustee d, 389 390 corporate partner, 378 general, 386 income, 375 partnership purchase of interest, partner retirement, 376 377 393 396 partnership interest, 376 corporate partners, 393 394 year-end, 375 376 individual partners, 391 393 income, 375 splitting the premium, 395 insurance needs, 383 386 surviving partners purchase collateral insurance, 385 386 interest, 394 395 funding partnership agreement, general, 375 see Partnership agreement interest deductibility, 400 401 key partner coverage, 384 385 partnership retirement obligations, personal insurance, 383 384 397 400 liability, 374 leveraged life insurance, 398 400 limited liability partnership (LLP), 374 magnitude of obligation, 397 proceeds of life insurance policies pay-as-you-go, 398 and, 378 381 sinking fund, 398 individual partners, 379 with life insurance, 398 corporate partners, 379 381 general, 373 374 transferring policy to partner, Personal injury 382 383 defined, 505 508 transferring policy to partnership, 383 Plaintiff unlimited liability, 374 taxation of, 505 506 year-end, 375 Policy Partnership agreement, see also Partner, Partnership funding 755 exempt, 7, 8 10, 18 interest in adjusted cost base
Policy (cont d) defined, 5 defined, 4, 6 group life insurance, 212 213 Policy dividend, 97, 184 185, 220 level premium calculation, 33 38, non-residents 45 46 clearance requirements, 364 368 level premium system, see Level premium system Policy gains loan, 66 deferred annuity, 463 paid by corporation on personally- disposition of interest, 76 owned insurance, 213 non-residents, 368 partnership buyouts transfer of ownership, 97 98 criss-cross method, 387 390 Policy loan, 5, 71, 81, 83, 84, 93 97 basic, 387 Policyholder basic with corporate partners, 388 borrowing against policy, 137 beneficiary designated, 390 taxation of, 1 2 Carter Commission, 2 trustee d, 389 390 splitting premium, 395 Premiums prescribed, 12 15 calculation of, 33 38 reserve calculation, 46 47 deductibility of split-dollar insurance arrangements charitable gift, 217 general, 295 collateral insurance premium split based on cash generally, 215 216 value, 300 301 historical perspective, 218 219 premium split based on term Interpretation Bulletin IT- insurance, 300 309R2, 222 223 Premiums payable under a life related matters, 223 224 insurance policy s. 20(1)(e.2), 219 222 defined, 84 amount deductible, 220 222 Prescribed annuity contracts requirements for (PACs), 25, 432 433, 434, 440, deductibility, 219 220 443 447 creditor s life insurance, 223 Pricing employee benefits, 216 elements of premium calculations generally, 215 216 expenses, 34 35 group life insurance, 212 213 general, 33 registered life insurance policy, 216 investment income, 35 36 Registered Retirement Savings lapse, 35 Plans (RRSPs), 216 mortality, 33 34 756
Pricing (cont d) Promissory note wellness and lifestyle, 34 disposition of shares under, 117 118 impact of assumptions, 38 39 Property level premium calculation, 45 46 capital property permanent policies, 39 47 deemed disposition of, 176 177 taxes, and, 36 38 depreciable, 176 Private corporation emigration, 360 362 business loan protection strategy, trusts 228 life insurance, 326 capital dividend account, 197 199, 206 212 deemed disposition, see Disposition keyperson insurance strategy and, property subject to emigration tax, 229 232 360 361 life insurance proceeds received by, segregated funds, 428 199 206 taxable Canadian property, 361 tax integration, 197 trust property, 315 tax planning, 2017 proposed United States situs assets, 178, 346 measures, 189 196 income converted to capital gains, Provincial premium and sales taxes, 194 196 371 income sprinkling, 189 192 Q passive investment portfolio, 192 194 Qualified farm or fishing property, 176 Probate fees, 178 179 Qualified small business corporation gifts of life insurance, 415 416, 420 shares, 114, 176, 269 mutual funds, 517 Quebec personally-owned insured annuities, 479 beneficiaries, 176, 178 segregated funds, 517 Civil Code testamentary insurance trusts and, collateral assignment 330 (hypothecation), 204 Proceeds of disposition trust provisions, 316, 327, 331 adjusted cost base, 84 90 R in excess of, 3 4 Registered Retirement Income annuity contracts, 428, 442, 447 Funds (RRIFs), 176, 177, 181, 275, defined, 83 280, 354, 361, 407, 408, 420, 423, dividends, 3 4 443, 516, 522 policy dividends, 97 RRIF insurance, 423 757
Registered Retirement Savings Plans retirement compensation (RRSPs), 176, 177, 180, 181, 182, arrangements, 294 275, 280, 343 344, 354, 361, 407, Restricted financial institution 408, 420, 423, 430, 432, 439, 441, 443, 457, 516, 522 defined, 219 IT-408R, 216, 343 Retirement compensation owning life insurance policy, arrangements (RCA), see also 343 344 Supplementary executive retirement plan (SERP) RRSP insurance, 216 accounting for RCA funded by life segregated funds, 430, 432, 516 insurance, 294 trusts and life insurance, 343 344 anti-avoidance rules, 274 Regulations, 695 724 audit initiative by CRA, 275 201, 502 deductibility 230, 520 employer contributions, 274 275 300, 21, 25, 433, 441, 442, 457, 475 prohibited investment, 275, 280 301, 450, 451, 452, 457 qualifying employee 304, 13, 180, 341, 432, 434, 441, contributions, 278 443, 446, 447, 474, 479, 482, 483 shareholder contributions, 278 305, 13, 456 deeming rules, 290 292 306, 8, 9, 21, 22, 25, 26, 81, 502 defined, 275 276 307, 7, 8, 21, 22, 85, 92, 441, 449 front end leveraged RCA 308, 10, 21, 24, 25, 26, 27, 84, 85, (FELRCA), 288 290 221, 450 general, 273 309, 11, 12, 13, 455 introduction, 273 275 310, 20, 21, 22, 23, 26, 441 PACs, 432 1400, 509 salary deferral arrangements (SDA), 1401, 7, 21, 22, 23, 24, 25, 27, 36, 276 277 81, 86, 92, 441 SERP, 280 288 2101, 210, 211 split-dollar insurance arrangements, 3702, 415 310 4900, 343 taxation of, 277 280 Reports winding up, 292 294 annuities Rollover reporting requirements, 431 433 children, 100 102 deferred annuities, 462 common-law partner, 186 financial statements deferred annuity, 463 corporations, 225 grandchildren, 100 102 partnerships, 225 intergenerational transfers, 100 102 758
Rollover (cont d) interest deductibility, 435, 522 RRIFs, 177 introduction of, 434 435 RRSPs, 177 investment management fees, 521 spousal rollover, 100 102, 177 maturity, 515 516 deferred annuity, 463 mutual funds and, 434 438, partnership property, 379 380 516 517 share redemption structures, non-resident insurer, 523 245 250 non-resident purchaser, 522 survivor spouse, 177 property of, 437 tax-free, 94 registered investments, as, 522 trust property residency, 522 523 life insurance, 327 328 securities, as, 434 surrender, 434 438 S taxation of Segregated funds, see also Annuities general, 517 518 acquisition fees, 521 income earned in fund, 518 519 adjusted cost base, 519 521 1970 1977, 435 436 annuities, 428 1978-present, 436 438 capital gains/losses, 436 437 time-weighted units, 517 charitable donations of, 411 defined, 517 deemed disposition, 520 T5 Supplementary form, 435 deemed inter vivos trust, 436 transfers in and out of fund, 436 defined, 428, 434 438, 516 withholding taxes and, 522 523 disposition of interest in, 519 521 Shareholders dividend tax credit, 437 agreement, 232 double taxation, potential for, 520 benefits, 213 flow-through treatment, 436 beneficiary designation on fund on fund investments, corporate-owned life insurance, 523 524 213 214 general, 1, 69, 515 516 living buyouts, 157 163 Guaranteed Investment Funds premiums paid by corporation, (GIFs), 523 524 213 guarantee top-up payments, 524 525 transfer of ownership of guarantee withdrawal benefits, corporate-owned insurance, 525 526 214 215 held by corporations, 526 528 business insurance trusts, 335 336 history, 434 438 buy/sell agreements, see Buy/sell hybrid allocation method, 524 arrangements 759
Shareholders (cont d) share redemption agreement, deductibility 245 250, 254 retirement compensation stop-loss rules, see Stop-loss rules arrangements, contributions to, valuation of, 107 113 277 280 Specified insurance benefit leveraged insurance to pay bonus to, defined, 71 154 157 sole shareholders, death of, 378 Split-dollar insurance arrangements, 295 313 split-dollar insurance arrangement, see Split-dollar insurance adjusted cost basis, 307 308 arrangements agreements, 312 transfer of policies, 118 133 alternative to, 312 313 corporation to shareholder, buy/sell arrangements, 310 120 122 charitable gift, as, 311 312, 405 related corporations, 123 130 defined, 295 shareholder to corporation, executive benefits, 309 130 133 family situations, 311 Shares financing policy deposits buy/sell agreements, see Buy/sell general, 300 arrangements premium split based on cash capital gains exemption, 114 116 value, 300 301 premium split based on term charitable donations of, 411 insurance, 300 deemed disposition upon death, generally, 295 107 113 holding company, 311 corporate-owned life insurance on deceased shareholder, related keyperson insurance, 309 310 parties and other shareholders, premium allocation 107 110 general, 300 life insurance shares, 110 113 premium split based on cash disposition of value, 300 301 premium split based on term under promissory note, 117 118 insurance, 300 gifts retirement compensation private company shares, 412 arrangements, 310 grandfathered situations using arrangements stop-loss rules, 257 buy/sell arrangements, 310 held by spousal trust, 113 114 charitable giving, 311 312 qualified small business corporation executive benefits, 309 shares, 176 family situations, 311 760
Split-dollar insurance Spouse arrangements (cont d) annuity contracts holding company, 311 rollover, 449 keyperson insurance, 309 310 transfer, 449 retirement compensation deferred annuity arrangements, 310 rollover, 463 Supplementary Employment Retirement Plan transfer to, 463 inter vivos transfers, 103 split-dollar life insured SERP strategy, 286 288 share redemption strategies tax treatment rollover, 260 assessing benefit, 301 304 spousal attribution rules, 103 characterizing taxable benefit, 305 tax-free rollovers, 99 deductibility of benefit, 306 307 Stop-loss rules, 256 262 employee vs. shareholder, application, 256 257 305 306 buy/sell agreements general, 301 hybrid method, 233, 250 255 quantifying the benefit, 304 305 share redemption method, transfers, 307 245 248 types grandfathering rules, 257 260 corporate-owned death benefit, planning, 260 262 297 299 fifty-percent solution, 261 262 employee/shareholder owned spousal rollover, use of, 260 261 death benefit, 295 297 share redemption agreements, general, 295 256 262 uses, 295 summary, 262 Split receipting arrangements Structured settlements further clarifications, 474 476 advantages of, 511 512 general rules, 472 473 annuity qualifying as, 505 Technical News No. 26, 473 476 assignment of, 510 benefits to payor, 513 Spousal trusts, 337 342 casualty insurer, taxation of, 505, insurance policy, 338 509 510 rollover, 181, 260 261 defined, 505 share redemption strategies, 245 disadvantages, 512 513 shares held by, 113 114 discount method, 513 United States estate tax discount rate, 513 tax credit relief, 356 financial reporting, 510 761
Structured settlements (cont d) non-residents general, 505 clearance requirements, 364 inflation and, 513 partial surrender, 91 93, 464 lump sum payments and, 506, 508 segregated funds, 519, 521, 523 owner, taxation of, 509 510 plaintiff, taxation of, 505 506 T practical application, 511 512 Tax integration recipient, taxation of, 505 506 defined, 197 reserve, 509 510 Tax shelter donation arrangements, social benefit, 506 508 413 social policy, 508 509 Tax shelter rules, 497 498 technical requirements, 505 508 Tax Relief Reconciliation Act, 2001, Succession plan, 264 350 Succession planning, see Family Taxable Canadian property business succession planning defined, 361 Supplementary executive retirement disposition, 361 plan (SERP), 280 288 Taxable conversion benefit defined, 273 defined, 70 funded, 273 Technical News generally, 273 No. 12, 655 investment options, 280 283 Term insurance, 39, 47 49 life insurance strategies conversion features, 47 48 front end leveraged RCA (FELRCA), 288 290 attained age conversion, 48 leveraged life insured SERP original age conversion, 48 strategy, 284 286 enhancements life insured SERP strategy, one year term to insure cash 283 284 value, 53 split-dollar life insured SERP options, 54 strategy, 286 288 premium offset, 54 unfunded, 273 forms of, 49 Surrender of policy annual renewable term, 49 annuity contracts, 428, 430, 448, 10- and 20-year renewable term 464 insurance, 49 deferred annuity, 463 level term insurance, 49 defined, 90 general attributes, 47 full surrender, 90 91 gifts to charities, 406 762
Term insurance (cont d) Crummey trust, 353 group term insurance, 406 defined, 315 319 joint coverages, 48 49 generally, 315 joint first-to-die, 49 income splitting tax rules, 323 326 joint last-to-die, 48, 334 attribution, 324 split-dollar insurance arrangements tax on split income (TOSI), NCPI, 300 324 326 premium split, 300 insurance proceeds received by, 201 202, 316 term-to-100, 49 50 inter vivos family trusts, 186 Traditional whole life, 51 55 inter vivos trusts, 342 credit options, 52 55 investments, 316 accumulate at interest, 52 53 irrevocable life insurance trusts cash, 52 (ILIT), 344 premium offset, 54 55 joint partner trusts, 328, 342 343 purchase paid-up additions, 53 life insurance and, 326 328 reduce premiums, 52 alter ego trusts, 342 343 term insurance enhancements, attribution planning, 330 53 54 avoidance of 21-year rule, enhancement options, 54 328 329 one-year term to insure cash business insurance trusts, 335 336 value, 53 54 change of trustee, 329 330 coverage options, 55 joint partner trusts, 328 Trusts RRSPs, 343 344 21-year deemed disposition rule, retirement compensation 321 322 arrangements, 337 Crummey trust, 353 spousal trusts, 337 342 alter ego trust, 326, 328, 338, testamentary insurance trusts, 341 343, 446 330 335 attribution planning, 330 United States estate tax and, 337 beneficiaries, see Beneficiaries mutual fund trust, 428, 517, 519 business insurance trusts, 335 336 property, 315 319 buy/sell agreements, 335 336 Quebec provisions, 173, 316, 327, 331 capital property registered retirement savings plans life insurance as, 316 317 (RRSPs), see Registered Retirement cash value life insurance policy, Savings Plans (RRSPs) 318, 320 retirement compensation change of trustee, 329 330 arrangements, 337, see also 763