Ghumman – Tax Court of Canada finds that a life insurance salesman was taxable on compensation received for selling himself a life insurance policy
[W]here a life insurance salesperson acquires a life insurance policy, a commission received by that salesperson on that policy is not taxable provided the salesperson owns that policy and is obligated to make the required premium payments thereon.
Guide T4130 subsequently added a statement that this policy “only applies where the income received is not significant and the insurance policy has no investment component or business use.”
Sommerfeldt J confirmed an inclusion in the employment income of a life insurance salesman of $57K in commissions received by his corporation for his purchase of a life insurance policy on his life that were then paid to him as salary. Sommerfeldt J stated that such assessment accorded with the Act, and that, in any event, this situation did not fall within the stated administrative policy (even leaving aside the CRA position that the amounts were “significant”) given that the commissions were not received by the individual directly but, rather, by his corporation.
Neal Armstrong. Summary of Ghumman v. The Queen, 2019 TCC 125 under s. 5(1).