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.
[Addressee]
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 119057
November 9, 2010
Dear [Client]:
Subject:
EXCISE INTERPRETATION
Insurance Broker Authorized to Act as a Special Broker
Thank you for your facsimile letter dated October 30, 2009 concerning the application of the Excise Tax Act to the 10% tax on insurance premiums issued through Special Brokers in Quebec. We apologize for the delay in responding.
All legislative references are to the Excise Tax Act (the Act) and the regulations therein, unless otherwise specified.
Statement of Facts
Based on the information in your facsimile letter, the following is our understanding of the issue:
1. An individual insurance broker ("Broker") is employed by an insurance brokerage firm ("Firm").
2. The Broker and the Firm are resident in Quebec.
3. The Broker is a damage insurance broker for Quebec insurance purposes.
4. The Broker is authorized to act as a special broker in Quebec pursuant to the Act Respecting the distribution of Financial Products and Services (Quebec). The Firm applied to the Bureau des services financiers as required by the Regulation Respecting Special Brokerage in Damage Insurance (no. 11).
5. The Firm has an establishment in Quebec and is registered with the Quebec Authority to act as a firm for the purposes of the Act Respecting the Distribution of Financial Products and Services (Quebec).
6. The Firm, through the Broker, places insurance with an insurer (the "Insurer") on behalf of a client (the "Client") of the Firm.
7. The insurance placed is property damage insurance and fire insurance to insure against loss or damage to the Client's property. The insurance is not reinsurance.
8. The Client's property (i.e. real property and tangible personal property) that is insured is situated in Quebec and in other parts of Canada. Approximately [...] percent of the value of the property in Canada is situated in Quebec. The remaining [...] percent of value of the property is situated in other parts of Canada.
9. The Insurer is not incorporated in Canada and is not resident in Canada.
10. The Insurer is a damage insurer under Quebec insurance law.
11. The Insurer has not sought to hold any license or similar designation issued by an insurance regulator in Canada to authorize it to transact the business of insurance in Canada.
12. The Insurer does not advertise or publicize its business in Quebec.
Interpretation Requested
We understand that you would like to confirm the following:
1. Whether 10% Excise Tax imposed under subsection 4(1) of the Act is not payable by an insured in the factual circumstances set out in this interpretation request.
2. Whether the 10% Excise Tax does not apply whether the premium for the particular policy is allocable to property situated in Quebec and/or to property situated outside of Quebec and within Canada.
3. Whether the special broker is not required to submit to the Canada Revenue Agency (CRA) any documentation other than the Excise Tax Return for Brokers (B241) indicating in the box therein that the broker holds "a certificate as a Quebec special broker" to support the non-payment of the Excise Tax by the insured.
4. Whether the insured is not required to submit to the CRA any documentation including the Excise Tax Return for the Insured (B243).
5. If no tax is payable under subsection 4(1) of the Act, there is no requirement for the insured to apply for an exemption of the tax in accordance with paragraph 4(2) (b) of the Act.
Interpretation Given
Question 1
Based on the facts provided, the 10% tax imposed under subsection 4(1) of the Act is not payable by the insured in the factual circumstances set out above.
Question 2
Based on the information provided, the 10% tax is not applicable to premiums for property situated in Quebec and/or property situated outside of Quebec and within Canada.
Question 3
The Special broker does not have to provide any additional documentation to the CRA other than the Excise Tax Return for Brokers (B241) and check the box under Details of Insurance that the broker holds "a certificate as a Quebec Special Broker".
Question 4
The insured does not have to submit to a B243 Return.
Question 5
Based on the information provided, an application for exemption is not required in the factual circumstances set out above.
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
UNCLASSIFIED
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