Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 143084
July 5, 2012
Dear [Client]:
Subject: EXCISE INTERPRETATION
Provincial Licensed Insurers in […][Province X] and 10% Excise Tax
Thank you for your letter of March 5, 2012 concerning the application of the Excise Tax Act (ETA) to provincially licensed insurers in […][Province X]. We apologize for the delay in responding to your question.
All legislative references are to the Excise Tax Act and the regulations therein, unless otherwise specified.
We understand that you would like CRA to confirm that the Part I tax on insurance premiums other than marine would not apply to insurance papers issued in the name of […] or […], as the […][Province X] considers the insurers licensed under their legislation to transact the business of insurance no matter what address is stated on the insurance paper.
INTERPRETATION REQUESTED
Whether the 10% tax imposed on insurance premiums pursuant to subsection 4(1) of the ETA is applicable when the [Province X] considers an insurer licensed no matter what address is stated on the insurance paper.
INTERPRETATION GIVEN
Based on the information provided, we confirm that the 10% tax imposed on insurance premiums under subsection 4(1) of the ETA will not apply when an insurer is licensed under the laws of a province.
Paragraph 4(1)(a) of the ETA imposes a 10% tax on the net premiums with respect to a contract of insurance in circumstances where the contract of insurance is entered into or renewed with an insurer not authorized under the laws of Canada or of any province to transact the business of insurance.
CRA’s definition of authorized is an insurer who is registered or authorized under the laws of Canada or of any province to transact the business of insurance.
The CRA is generally satisfied that insurance premiums are exempt from the tax imposed pursuant to paragraph 4(1)(a) of the ETA when the insurer is licensed and authorized by OSFI or a provincial regulator to transact the business of that class of insurance in Canada.
The foregoing comments represent our general views with respect to the subject matter of your request. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Goods and Services Tax Rulings, do not bind the Canada Revenue Agency with respect to a particular situation. Future changes to the Excise Tax Act, regulations, or our interpretative policy could affect this interpretation.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-6720.
Yours truly,
Sharon Kendall
Excise Taxes and Other Levies Unit
Excise Duties & Taxes Division
Excise and GST/HST Rulings Directorate
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