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EY 3: Shareholder base
or “Explains how life insurers calculate income and deductions for their shareholder base”
You could also call this:

“Splitting income and tax credits between policyholder and shareholder bases for insurance policies”

When you have a class of insurance policies, you need to split up the income and tax credits between two parts: the policyholder base and the shareholder base. Here’s how you do it:

For the policyholder base, you divide the income or tax credits in the same way as the policyholder base income is related to the total gains for that type of income or credit.

For the shareholder base, you divide the income or tax credits in the same way as the shareholder base income is related to the total gains for that type of income or credit.

If you think there’s a fairer way to split up the income or tax credits for a class of policies, you can use a different method. But this different method needs to be figured out by an expert in numbers (an actuary) and must be more fair and reasonable than the usual way of splitting things up.

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Next up: EY 5: Part-year tax calculations

or “How to calculate taxes for part of a year if you're a life insurer”
Next

Part E Timing and quantifying rules
Life insurance rules

EY 4Apportionment of income of particular source or nature, and of tax credits

  1. For a class of policies, income of a particular source or nature, and tax credits received, are apportioned between the policyholder base and shareholder base—

  2. in the same proportion as the policyholder base income relating to the particular source, nature, or credits bears to the life insurer's total gross gains relating to the particular source, nature, or credits, in the case of the policyholder base:
    1. in the same proportion as the shareholder base income relating to the particular source, nature, or credits bears to the life insurer's total gross gains relating to the particular source, nature, or credits, in the case of the shareholder base.

      1. For a class of policies, the life insurer may use a basis of apportionment that is different from the basis described in subsection (1), if that basis results in an amount, actuarially determined, that is more equitable and reasonable than an amount determined using the basis described in subsection (1).

      Notes
      • Section EY 4: substituted, on , by section 185(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).