Taxable insurance premiums

Complying with the Excise Tax Act

The Canada Revenue Agency (CRA) has initiated an aggressive audit process via Part 1 of the Excise Tax Act . The Act imposes a 10% tax on insurance premiums placed with an insurer or broker outside of Canada.

How will the Excise Tax Act affect your company?

If you are a non-resident parent company that provides insurance on behalf of your Canadian subsidiary, your business may have to pay the federal Excise Tax to the CRA. The tax effectively adds 10% to the cost of acquiring insurance protection even if you used an authorized insurer.

Certain types of policies are not taxable, including life, personal accident, sickness and marine insurance. Insurance coverage for nuclear risk and other risks that do not have coverage in Canada are also exempt from the Excise Tax Act . If you aren’t exempt, you must file an annual return on or before April 30.

How PricewaterhouseCoopers can help

Our Indirect Tax practice will help clients determine if they qualify for exemption from the federal Excise Tax. If your company must file a return, we will review the coverage details to see if a filing position or allocation may be available to reduce or eliminate the amount of tax payable.

Contact a member of our team to obtain help with your Excise Tax Act exemption.