CRA has expressed concerns to Finance about products which technically skirt the LIA policy rules

CRA has identified leveraged insurance arrangements (which “technically escaping the LIA policy definition”) where products that form part of the arrangements are interdependent and would not have been otherwise issued without the others. These arrangements:

involve manipulating the terms of the products (including pricing) that form part of the arrangements and the issuance of products that would not have been otherwise issued on a stand-alone basis (including life insurance policies insuring non-insurable lives) to obtain unintended tax benefits.

In addition to potentially attacking these arrangements on the basis that interdependent products are one contract or under GAAR, CRA has brought its concerns to Finance.

Neal Armstrong. Summary of 3 May 2016 CALU Roundtable, Q. 1, 2016-0632601C6 under s. 248(1) – LIA policy.