When the contract matures, the contract owner receives the maturity proceeds. The tax treatment depends on the contract type:
- Non-registered contract: The maturity proceeds minus the ACB produce a capital gain (or capital loss). The gain is reported on the final T3 allocation for the year, and a deemed disposition of the contract occurs.
- RRSP or RRIF: Withdrawals are included in income at full marginal rates, as with any RRSP/RRIF withdrawal. No capital gains treatment.
- TFSA: Proceeds are received tax-free. No ACB calculation required.
Guarantee top-up at maturity: If the guarantee is triggered (market value is below the guaranteed minimum), the insurer's top-up payment is treated as a capital transaction. The entire maturity amount is treated as proceeds of disposition, and the capital gain or loss is calculated against the ACB.