Multiple Corporate Beneficiaries of a Single Life Insurance Policy-Caution-Where there are multiple corporate beneficiaries, the addition to the capital dividend account may be significantly reduced.


n a May 8, 2018 Technical Interpretation (2018-0745811C6, Danis, Sylvie), CRA reiterated their prior comments (VTN 434(10)) that where multiple corporate beneficiaries receive proceeds from a single life insurance policy, the addition to the capital dividend account for each corporate beneficiary would be reduced by the full adjusted cost basis of the policy.

They further opined that where two corporations are not only both beneficiaries but also joint owners of a life insurance policy, the full adjusted cost basis of the policy would still be applied to both corporate beneficiaries. This was the case where the policy named OpCo as the beneficiary of $1,000,000 of death benefit coverage, with any excess flowing to HoldCo.

For further information see Video Tax News Monthly Tax Update Newsletter, Issue No. 444