In this February 2019 issue of the CALU Report, it was stated that subsection 70(5.3) provides that for purposes of section 128.1, the FMV of a foreign life insurance owned by a non-resident corporation on the life of shareholder, which corporation subsequently becomes resident in Canada as a consequence of the shareholder becoming a resident of Canada, shall be determined as though the FMV of the life insurance policy on the shareholder’s life was the CSV of the policy immediately prior to immigrating to Canada.

However, in a recent CRA technical interpretation provided to CALU, the CRA expressed the view that subsection 70(5.3) would not apply in determin­ing the FMV of a foreign issued corporate-owned policy for purposes of section 128.1 upon the non-resident cor­poration becoming a resident in Canada. Instead, the foreign issued life insurance policy would be valued in accordance with normal valuation principals taking into account all facts relevant to the particular situation.

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