Cases
The Queen v. The Maritime Life Assurance Co., 2000 DTC 6402 (FCA)
Amounts styled as "investment administration fees" received by a life insurance company in respect of segregated funds managed by it (i.e., the portion of premium revenues that were not retained in the segregated funds) were found not to be consideration for a taxable supply given that the fact that it managed the segregated funds did not necessarily imply that the segregated funds must be treated as paying consideration for those management services.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 146 - Subsection 146(2) - Paragraph 146(2)(c.3) | 37 |
Subsection 131(1)
Paragraph 131(1)(c)
Subparagraph 131(1)(c)(i)
Administrative Policy
25 April 2023 GST/HST Ruling 202403 - Eligibility for employer to claim ITCs on amounts related to investment management services for pooled funds of an insurer
An employer funded its obligations under pension plans for its employees by paying premiums under insurance policies to an insurer, which invested the premiums in pooled funds (i.e., segregated funds) whose values fluctuated with the value of specified investments. The insurer agreed under the polices to pay benefits to the employer, based on segregated fund values, generally when the employees retired or died.
Amounts in respect of annual investment management fees (“IMFs”) were deducted from the unit values of pooled funds, without the insurer issuing any invoices for the IMFs.
CRA noted that there was insufficient information to determine whether the deduction of the IMFs represented the payment of charges by the pooled funds (viewed as segregated funds that were deemed to be separate trusts by s. 131) to the insurer (in which event such charges would be subject to GST/HST pursuant to s. 131(1)(c)(i)), or whether the IMFs were merely an element in computing the unit value of the pooled funds, so that they were not consideration for any supply.
Regarding s. 131(1)(c), CRA stated:
[S]ubparagraph 131(1)(c)(i) generally provides that where an amount is deducted from the segregated fund, and that amount is in respect of a supply of property or a service that the fund is considered to have acquired from the insurer, that supply is deemed to be a taxable supply and the amount deducted is deemed to be consideration for that supply. Subparagraph 131(1)(c)(ii) generally provides that if the amount deducted from the fund is not in respect of property or a service considered to have been acquired from the insurer or another person, the insurer is deemed to have made, and the fund to have received, a taxable supply and the amount deducted is deemed to be consideration for that supply. Certain exceptions apply to paragraph 131(1)(c).
As such, in many cases, where an amount is deducted from a segregated fund, the amount will be deemed to be consideration paid by the segregated fund to the insurer for a taxable supply made to it by the insurer.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 169 - Subsection 169(1) | no ITCs were available to an employer regarding any charges by an insurer to segregated funds to fund retirement benefits to employees | 349 |