27 October 2004 Excise Interpretation 53414 - Part I Insurance

Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.

Dear XXXXX:

Thank you for the letter XXXXX from XXXXX of your XXXXX office (with attachments), concerning the application of the Excise Tax to the transaction(s) described below.

Statement of Facts

Our understanding of the facts, the transaction(s), and the purpose of the transaction(s) is as follows:

XXXXX is an Insurance Broker with offices in XXXXX.

XXXXX filed a return under subsection 5(2) of the Excise Tax Act (ETA) in respect of contracts of insurance on which the net premiums were taxable under section 4 of the ETA for the calendar year XXXXX.

One contract reported in the said return was the policy issued to XXXXX by XXXXX. The policy number was XXXXX and the net premium was $XXXXX.

The Canada Revenue Agency (CRA) invoiced the said XXXXX for the Excise Tax of 10% of the net premium

Ruling Requested

The premium of $XXXXX for the policy number XXXXX issued to XXXXX is not taxable under Part I of the ETA.

Ruling Given

Based on the facts set out above, we rule that the premium of $XXXXX for the policy number XXXXX issued to XXXXX is not taxable under Part I of the ETA.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to our interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Explanation

Under subsection 4(1) of the ETA, the tax does not apply to a contract of insurance with any insurer authorized under the laws of Canada to transact the business of insurance if the contract is entered into through a broker in Canada.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-6720.

Yours truly,

Denis Linteau
Other Levies Unit
Excise Duties and Taxes Division
Excise and GST/HST Rulings Directorate

2004/07/30 — RITS 50277 — Excise Tax on Insurance Premiums