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You must work out FIF income for an interest in a FLP using either:
- the deemed rate of return method, or
- the cash surrender value method.
Choosing the taxation method
The deemed rate of return method is applied to your interest in a FLP unless you elect to use the cash surrender value method. [subsections 536(1) and (2)]
If you elect to use the cash surrender value method, you must also elect to use a notional accounting period for the FLP that coincides with the period for which the cash surrender values are available. [section 487 and subsection 536(3)]
An election to apply the cash surrender value method is irrevocable. [subsections 487(3) and 536(5)]
Last modified: 28 Jun 2007QC 27895