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: Taxation of critical illness insurance
Position: No comments without a copy of the policy.
Reasons: See below.
XXXXXXXXXX
2014-051683
K. Robinson
May 15, 2014
Dear XXXXXXXXXX:
Re: Critical Illness Insurance Arrangements
We are writing in response to your letter of January 8, 2014, requesting our views regarding the income tax treatment of amounts received under a critical illness insurance arrangement and the deductibility of premiums. We regret the delay in responding to your query.
This technical interpretation provides general comments about the provisions of the Income Tax Act ("Act") and related legislation. It does not confirm the income tax treatment of a particular situation but is intended to assist you in making that determination. The income tax treatment of transactions will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R5, "Advance Income Tax Rulings".
While we understand that you have had the opportunity to discuss some of the issues you raised with us by telephone, we are unable to provide you with comments relating to the taxation of insurance policies generally described as "critical illness insurance". Given the broad variations in insurance policies and products, and that the terms and conditions of these types of contracts or arrangements are so flexible; such a determination would require a detailed review of the terms and conditions of the particular policy and consideration of all the relevant facts and circumstances pertaining to the particular situation. We would only be prepared to provide written confirmation of the tax implications inherent in such a situation where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R5, "Advance Income Tax Rulings".
However, where the particular situation involves completed transactions, a review of the relevant facts and circumstances surrounding the particular situation would be required. Such review would normally be conducted by the applicable Tax Services Office during the course of an income tax audit, which, if undertaken, would be carried out after the particular taxpayer has prepared and filed its income tax return for the year.
We trust that these comments will be of assistance.
Yours truly,
Michael Cooke, C.P.A., C.A.
Manager
Business Income and Capital Transaction Section
Business and Employment Division
Income Tax Rulings Directorate
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