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: Can the CRA provide an update regarding its review of its longstanding administrative position described in paragraph 27 of IT-470R?
Position: The position will not be changed at this time.
Reasons: The position is intended to reduce the compliance burden of businesses in respect of insignificant amounts.
CALU CRA Roundtable – May 2012
Question 1 – Update on IT Review Initiative
Question 1.1
The Canada Revenue Agency (“CRA”) has indicated at the 2010 CALU Roundtable that it was reviewing its position expressed in paragraph 27 of Interpretation Bulletin IT-470R, Employees’ Fringe Benefits Consolidated. Can the CRA provide an update on its review?
CRA Response
Paragraph 27 of Interpretation Bulletin IT-470R outlines the administrative position of the CRA concerning non-taxable commissions received on personal sales, and states, in part:
“...where a life insurance salesperson acquires a life insurance policy, a commission received by that salesperson on that policy is not taxable provided the salesperson owns that policy and is obligated to make the required premium payments thereon.”
We have considered the views set out in the July 6, 2010 joint submission from CALU and Advocis and we have concluded that the administrative position set out above should not be changed at this time.
The objective of the administrative position in paragraph 27 of IT-470R is to reduce the compliance burden of businesses with respect to relatively small employee discounts and commissions. As we have previously indicated, it is not intended to permit the tax-free receipt of significant employment remuneration or other income. Furthermore, we have previously indicated that the administrative position is not intended to apply where the insurance was obtained for investment or business purposes. Accordingly, where based on the circumstances of a particular situation, the CRA is of the view that the amount of commission income is significant, or the particular life insurance policy has an investment component or a business use, the above-described administrative position will not apply.
Isabelle Landry
2012-043614
May 8, 2012
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