Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Whether the premiums for disability insurance, purchased through a professional association plan (such as the XXXXXXXXXX ) by a self-employed individual would be a deductible business expense?
Position: No
Reasons: Expense is a personal and living expense.
XXXXXXXXXX 2004-010855
Shaun Harkin, CMA
February 28, 2005
Dear XXXXXXXXXX:
Re: Technical Interpretation Request: Disability Insurance Premiums through a Professional Association Plan
We are writing in reply to your letter of December 16, 2004, wherein you ask whether the premiums for disability insurance purchased by a self-employed individual through a professional association are a deductible business expense.
Where an insurance policy, including one purchased through a professional association, provides a self-employed taxpayer with a benefit for loss of income earning capacity, such as income disability insurance, it is our view that the premium paid on such a policy is a personal and living expense which is non-deductible. However, benefits received by the taxpayer under such a plan would generally not be included in income for tax purposes. The fact that the disability insurance is purchased through a professional association does not affect the deductibility of the premiums.
The foregoing comments represent our general views with respect to the subject matter. As indicated in paragraph 22 of Information Circular 70-6R5, the above comments do not constitute an income tax ruling and accordingly are not binding on the Canada Revenue Agency. Our practice is to make this disclaimer in all instances in which we provide an opinion.
We trust the above comments are of assistance.
Yours truly,
Wayne Antle, CGA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
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