Distributing An Interest In A Life Insurance Policy On A Corporate Wind-Up

In a recent Interpretation (CRA Views No. 2015-0573841C6) (the "Interpretation"), the Canada Revenue Agency ("CRA") discussed its position on a distribution of an interest in a life insurance policy from a corporation to a shareholder upon the corporation's wind-up. The CRA had been asked to revisit its position taken at the 2005 Conference for Advanced Life Underwriting ("CALU"), where it had indicated that certain provisions of the Income Tax Act (Canada) ("ITA") would apply such that in circumstances involving the wind-up of a corporation, a distributed interest in a life insurance policy would be disposed of at the policy's fair market value ("FMV") rather than at its cash surrender value (a generally unhelpful position for the taxpayer).