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.
May 6, 1992
DRAFT RESPONSE
PRAIRIE PROVINCES TAX CONFERENCE
MAY 19 & 20, 1992
17. What is the current assessing practice of Revenue Canada in respect of split-dollar life insurance policies? Specifically, would there be a taxable benefit to a shareholder-employee if the annual premium, or the portion thereof, that is paid by the corporation does not exceed the increase in the cash surrender value of the policy in that year? ( A letter from the Department, Letter 910482, dated May 21, 1991, Director, Business and General Division suggests that there would be no benefit in this instance).
Response
The letter dated May 21, 1991 from the Business and General Division may have been misleading. It is a question of fact whether or not an employee/shareholder receives a benefit, under a split dollar life insurance plan, which is to be included in income pursuant to paragraph 6(1)(a) or subsection 15(1). It is our view that the benefit to be included in an employee/ shareholder's income in a particular taxation year from such a policy is the amount by which the premium cost for equivalent term coverage exceeds the premiums paid, if any, by the employee/shareholder under the policy.
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