CRA indicates that an advisor’s reimbursement of a client for the client’s costs in reviewing a proposed life insurance policy purchase was an s. 12(1)(x) inclusion

On a client agreeing to acquire a life insurance policy from an advisor, the advisor agreed to repay the client for the accounting fees the client had incurred for the review of the policy. CRA indicated that such payment generally would be deductible in computing the advisor’s income under s. 9, and that the reimbursement would be included in the client’s income pursuant to s. 12(1)(x) (and that such inclusion would apply even if the client did not proceed to acquire the policy).

The above was consistent with 2010-0359401C6 (where instead the advisor paid a cash rebate to the client).

Neal Armstrong. Summary of 28 September 2023 CLHIA Roundtable Q. 2, 2023-0971711C6 under s. 12(1)(x).