Tax Act Overview

A

The Tax Act mentioned in the question likely refers to the Canadian Income Tax Act.

According to the Income Tax Act, a life insurer is subject to an investment income tax on its "net Canadian life investment income." This tax is in addition to other taxes the life insurer may be required to pay on its income.

The rate of the investment income tax depends on the type of income earned. For example, income from investments in Canadian corporations is generally subject to a lower rate than income from investments in foreign corporations.

Based on the options provided, the correct answer is B. A life insurer is subject to an investment income tax of 25 percent on its "net Canadian life investment income."