Form T2142 Part XII.3 "Tax Return Tax on Investment Income of Life Insurers (2016 and Later Tax Years)" - Canada

Form T2142 or the "Form T2142 Part Xii.3 "tax Return Tax On Investment Income Of Life Insurers (2016 And Later Tax Years)" - Canada" is a form issued by the Canadian Revenue Agency.

Download a PDF version of the Form T2142 down below or find it on the Canadian Revenue Agency Forms website.

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Download Form T2142 Part XII.3 "Tax Return Tax on Investment Income of Life Insurers (2016 and Later Tax Years)" - Canada

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Part XII.3 Tax Return
Tax on Investment Income of Life Insurers
(2016 and later tax years)
•
If you are a life insurer, use this return to calculate the Part XII.3 tax on taxable Canadian life investment income
for the year.
Do not use this area
•
The terms used are explained on page 2.
•
All legislative references are to the federal Income Tax Act and Income Tax Regulations.
•
Calculate all amounts for each policy separately, and then total the amounts before entering the figures in
parts 1 to 4.
Complete two copies of this return and mail them, separately from any other return, to the tax centre serving your
•
head office, on or before the due date of your T2 Corporation Income Tax Return. Find your tax centre's address by
going to canada.ca/tax-centres.
•
If you do not file this return by the due date, we can charge you a penalty. This penalty and any unpaid taxes are
subject to interest compounded daily at a prescribed rate.
•
Instalments of Part XII.3 tax are payable monthly during the tax year, in accordance with section 211.3 of the Act.
Any remainder is payable on or before your balance-due day for the tax year. Attach a cheque or money order
payable to the Receiver General for Canada. Specify T2142, along with the name and business number of the life
insurer, and the tax year of the account to be credited.
Name of life insurer
Business number
Address
Postal code
Tax year for the period
Year Month Day
Year Month Day
Tax services office
from
to
Name of contact person
Telephone number
Part XII.3 tax
Complete this summary using the amounts calculated on parts 2 to 5 of this return.
A
Basic investment income (amount 2E or 2F whichever applies from Part 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B
Claims fluctuation reserve adjustment (amount 3L from Part 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C
Subtotal (amount A plus amount B)
D
Adjustment for amounts reported to policyholders (amount 4A from Part 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
E
Canadian life investment income (loss) for the year (amount C minus amount D) (see note) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F
Canadian life investment loss carryforward applied during the year – from Part 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
G
Taxable Canadian life investment income (amount E minus amount F) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
H
Part XII.3 tax payable for the year (amount G multiplied by 15%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
I
Instalments paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
If the result is negative, you have an overpayment. If the result is positive, you have
Balance (amount H minus amount I)
J
an unpaid balance. Generally, we do not charge or refund a difference of $2 or less.
K
Overpayment
Unpaid balance
Tick the box that applies:
Enclosed payment
Note
If you have a Canadian life investment loss for the year, no Part XII.3 tax is payable. You can carry forward this loss and apply it against Canadian life
investment income in later tax years. The carry-forward periods for unused losses are given in Part 5 on page 4.
Certification
Do not use this area
I certify that the information given in this return and in any attached documents is, to the best of my knowledge,
true, correct, and complete.
Name of authorized officer
Position or office
Signature of authorized officer
Date (Year Month Day)
Page 1 of 4
T2142 E (18)
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Part XII.3 Tax Return
Tax on Investment Income of Life Insurers
(2016 and later tax years)
•
If you are a life insurer, use this return to calculate the Part XII.3 tax on taxable Canadian life investment income
for the year.
Do not use this area
•
The terms used are explained on page 2.
•
All legislative references are to the federal Income Tax Act and Income Tax Regulations.
•
Calculate all amounts for each policy separately, and then total the amounts before entering the figures in
parts 1 to 4.
Complete two copies of this return and mail them, separately from any other return, to the tax centre serving your
•
head office, on or before the due date of your T2 Corporation Income Tax Return. Find your tax centre's address by
going to canada.ca/tax-centres.
•
If you do not file this return by the due date, we can charge you a penalty. This penalty and any unpaid taxes are
subject to interest compounded daily at a prescribed rate.
•
Instalments of Part XII.3 tax are payable monthly during the tax year, in accordance with section 211.3 of the Act.
Any remainder is payable on or before your balance-due day for the tax year. Attach a cheque or money order
payable to the Receiver General for Canada. Specify T2142, along with the name and business number of the life
insurer, and the tax year of the account to be credited.
Name of life insurer
Business number
Address
Postal code
Tax year for the period
Year Month Day
Year Month Day
Tax services office
from
to
Name of contact person
Telephone number
Part XII.3 tax
Complete this summary using the amounts calculated on parts 2 to 5 of this return.
A
Basic investment income (amount 2E or 2F whichever applies from Part 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B
Claims fluctuation reserve adjustment (amount 3L from Part 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C
Subtotal (amount A plus amount B)
D
Adjustment for amounts reported to policyholders (amount 4A from Part 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
E
Canadian life investment income (loss) for the year (amount C minus amount D) (see note) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F
Canadian life investment loss carryforward applied during the year – from Part 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
G
Taxable Canadian life investment income (amount E minus amount F) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
H
Part XII.3 tax payable for the year (amount G multiplied by 15%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
I
Instalments paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
If the result is negative, you have an overpayment. If the result is positive, you have
Balance (amount H minus amount I)
J
an unpaid balance. Generally, we do not charge or refund a difference of $2 or less.
K
Overpayment
Unpaid balance
Tick the box that applies:
Enclosed payment
Note
If you have a Canadian life investment loss for the year, no Part XII.3 tax is payable. You can carry forward this loss and apply it against Canadian life
investment income in later tax years. The carry-forward periods for unused losses are given in Part 5 on page 4.
Certification
Do not use this area
I certify that the information given in this return and in any attached documents is, to the best of my knowledge,
true, correct, and complete.
Name of authorized officer
Position or office
Signature of authorized officer
Date (Year Month Day)
Page 1 of 4
T2142 E (18)
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Privacy statement
Personal information is collected under the Income Tax Act to administer tax, benefits, and related programs. It may also be used for any purpose related to
the administration or enforcement of the Act such as audit, compliance and the payment of debts owed to the Crown. It may be shared or verified with other
federal, provincial/territorial government institutions to the extent authorized by law. Failure to provide this information may result in interest payable,
penalties or other actions. Under the Privacy Act, individuals have the right to access their personal information and request correction if there are errors or
omissions. Refer to Info Source canada.ca/cra-info-source, personal information bank CRA PPU 047.
Terms
The terms used in this return provide general guidance for the calculations required under the federal Income Tax Act. For precise requirements, see
section 211 of the Act and 1401 of the Regulations.
n
•
V122487 interest rate (i
) used in calculating income under Part XII.3 is the moving average rate for the 60-month period before the tax year on certain
n
Government of Canada bonds. See subsection 211(1). If you have a December 31 year-end, and do not have a short tax year, (i
) has the following
values: 4.19% for 2010; 4.04% for 2011; 3.83% for 2012; 3.43% for 2013; 3.16% for 2014; 2.9% for 2015; 2.58% for 2016; 2.30% for 2017 and 2.27% for
n
2018. To get V122487 interest rates (i
) for years not shown on this form, contact your tax services office.
CFRmax represents the maximum amount that would be determined under Regulation 1401(1)(c.1) for the policy, if Regulation 1401(1) applied to all life
•
insurance policies, and that amount were determined without reference to policy loans or reinsurance arrangements.
Existing guaranteed life insurance policies (EGLIPs) are non-participating life insurance policies in Canada, issued before January 1, 1990, if the
•
amount and number of premiums and the amount of benefits were fixed and determined before that date.
gtd
•
Guaranteed rate of interest (i
) for a reduced rate policy (RRP) refers to the rate of interest used in determining the guaranteed benefits or 4%,
gtd
whichever is greater. For a full rate policy (FRP), (i
) is deemed to be nil.
Full rate policies (FRPs) are taxable life insurance policies other than reduced rate policies.
•
Reduced rate policies (RRPs) are taxable life insurance policies with guaranteed benefits provided under the terms and conditions of the policies as they
•
existed on March 2, 1988, and that have not been changed after March 2, 1988, unless to give effect to the terms and conditions that were determined
before March 3, 1988.
Reinsurance arrangements do not include assumption arrangements in which the assuming company takes over the position of the original insurer; they
•
are to be treated as direct insurance of the assuming company for these calculations.
Taxable life insurance policies are life insurance policies in Canada other than EGLIPs, annuity contracts, registered pension plans, registered life
•
insurance policies, and retirement compensation arrangements.
Part 1
Maximum reserves determined for Part XII.3 tax purposes
Reconciliation of reserves for investment income tax (IIT)
Individual
Group
Maximum reserve for the current year determined under Regulation*1401(1)(a), (c), or (d):
1A
Life insurance policies in Canada (ignore policy loans and accrued interest) . . . . . . . . . . . . . . . . . . . . . . . . .
1B
Reinsurance ceded on all life insurance policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1C
Subtotal (amount 1A plus amount 1B)
1D
Reinsurance assumed on all life insurance policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1E
Direct written – Life insurance policies in Canada (amount 1C minus amount 1D) . . . . . . . . . . . . . . . . . . . .
Non-taxable policies (ignore reinsurance, policy loans, and accrued interest):
1F
Existing guaranteed life insurance policies (EGLIPs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1G
Annuity contracts (including settlement annuities) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1H
Registered life insurance policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1I
Registered pension plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1J
Retirement compensation arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1K
Total deductions (add amounts 1F to 1J)
1L
Policies subject to IIT(Investment Income Tax) (amount 1E minus amount 1K) . . . . . . . . . . . . . . . . . . . . . . . .
Maximum determined under Regulation 1401(1)(d)(ii) re: disabled life reserves
1M
that are included at amount 1L (ignore reinsurance, policy loans, and accrued interest) . . . . . . . . . . . . . . . . . .
1N
Taxable policies – current year (amount 1L minus amount 1M) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1O
Taxable policies – previous year (amount 1N, or line 14 of the previous year) . . . . . . . . . . . . . . . . . . . . . . . . .
1P
Mean taxable policies [(amount 1N plus amount 1O) divided by 2] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1Q
Mean maximum determined reserves subject to IIT (total of amounts on 1P) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(to be allocated in
The inclusion of the cash surrender or the net premium reserve values have changed for non annuities. Review Regulation
*
column 4 of Part 2)
1401(1)(a), (c), or (d) to make sure you use the proper values in your calculations for policies after 2016.
Page 2 of 4
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Part 2
Canadian life investment income or basic investment income
Calculation of element A in subsection 211.1(3)
1
2
3
4
5
6
Reduced rate policies
Previous year's maximum
Current year's maximum
Mean maximum reserve
n
gtd
I.
Column 4
i
minus i
reserve
reserve
(column 2 + column 3) ÷ 2
(if negative, enter "0")
×
gtd
(i
)
(see
note
1)
(see
note
2)
(see
note
3)
(see
note
4)
column 5
4.0%
2A
Total
7
8
9
10
11
12
gtd
II.
Previous year's maximum
Current year's maximum
Mean maximum reserve
n
gtd
Column 10
Full rate policies (i
)
i
minus i
reserve
reserve
(column 8 + column 9 ) ÷ 2
(if negative, enter "0")
×
(see
note
1)
(see
note
2)
(see
note
3)
column 11
(see
note
4)
2B
0.0%
If you need more space, attach a separate sheet and give similar details.
III. Basic investment income
2C
×
RRPs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
amount 2A
65% . . . . . . . . . .
2D
×
FRPs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
amount 2B
55% . . . . . . . . . .
2E
Total Basic investment income, element A in subsection 211.1(3) (amount 2C plus amount 2D) . . . . . . . . . . . . . . . . . . . .
(enter at amount A
or
on page 1)
If the tax year of the corporation is less than 51 weeks, amount 2E is prorated as follows:
2F
×
÷
number of days in the tax year (see
note
5)
Amount 2E
365 . . . . . . . . . . . . . . . . . . . . . . . . . .
(enter at amount A
Notes
on page 1 )
1. For previous-year values, allocate the amount from amount 1O of Part 1.
2. For current-year values, allocate the amount from amount 1N of Part 1.
3. The total of column 4 and 10 for RRPs and FRPs must equal the amount on amount 1Q of Part 1.
4. For policies issued after 2016, the rules have changed for calculating the cash surrender value and net premium reserve components for part XII.3.
Refer to Regulation 1401(1)(c) and the definition of net premium reserve in Regulation 1401(3) to see how to calculate those amounts.
5. The number of days in the tax year does not include February 29.
Part 3
Canadian life investment income or claims fluctuation reserve (CFR) adjustment
Calculation of element B in subsection 211.1(3)
Calculation of reserve adjustment:
3A
CFRmax – current year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3B
CFRmax – previous year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3C
Mean CFRmax – current and previous year [(amount 3A plus amount 3B) divided by 2] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3D
n
V122487 interest rate (i
) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3E
Multiply amount 3C by amount 3D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
or
If the tax year of the corporation is less than 51 weeks, prorate amount 3E as follows:
÷
3F
×
number of days in the tax year (see note)
365 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
amount 3E
3G
1990 to current year (amount 3E or amount 3F whichever applies). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3H
1990 to year before current year (amount 3E or amount 3F whichever applies)
3I
Current year CFRmax minus 1989 CFRmax (if negative, enter "0") . . . . . . . .
3J
Total deductions (amount 3H plus amount 3I)
3K
Amount 3G minus amount 3J (if negative, enter "0") . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3L
Total reserve adjustment, element B in subsection 211.1(3) (amount 3E or 3F whichever applies, minus amount 3K) . . . . . . .
(enter at amount B
Note
on page 1)
The number of days in the tax year does not include February 29.
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Part 4
Canadian life investment income, or adjustment for amounts reported to policyholders
Calculation of element C in subsection 211.1(3)
1
2
3
4
5
6
Accrued income
Policy proceeds
Number of tax years or
Total
Relevant
(column 4 × column 5)
part years policy has
section 12.2
paragraph 56(1)(j)
(column 2 + column 3)
percentage
been taxable
(see note)
(see note)
I. Full rate policies
N/A
100%
II. Reduced rate policies
N/A
50%
III. Former EGLIPs (1 to
13)*
1
0%
nil
2
0%
nil
3
0%
nil
4
5%
5
10%
6
15%
7
20%
8
25%
9
30%
10
35%
11
40%
12
45%
13 or more
50%
4A
IV. Total adjustments for amounts reported to policyholders, element C in subsection 211.1(3) . . . . . . . . . . . . . . . . . . . . .
(enter at amount D
III. Former EGLIPs: not included in full rate or reduced rate policies that are now taxable.
*
on page 1)
Note
The amounts reported in columns 2 and 3 should be the amounts that would be included in the income of a policyholder
for the calendar year ending in the tax year, under section 12.32 or paragraph 56(1)(j) of the Act.
Part 5
Canadian life investment loss carry-forward under subsection 211.1(2)
•
The carry-forward period for unused losses is 20 years.
•
Adjustments may be required if there has been an amalgamation under subsection 87(2.2) or a wind-up under subparagraph 88(1)(g)(i).
1
2
3
4
5
Tax year-end
Canadian life investment
Add
Deduct
Loss carryforward
loss carryforward at the
loss from
loss carryforward
available for
Year Month Day
start of the year
current year
used in the year
later years
Total
(enter at amount F
on page 1)
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