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.
930162
XXXXXXXXXX J.P. Dunn
(613) 957-8953
Attention: XXXXXXXXXX
February 4, 1993
Dear Sirs:
Re: Accidental Death and Dismemberment Insurance Benefits
This is in reply to your correspondence of January 14, 1993 regarding the treatment for income tax purposes of premiums paid in respect of and benefits received pursuant to accidental death and dismemberment ("AD&D") insurance policies. As described in your letter, these policies provide coverage in the event of death of directors and shareholders of a corporation. The beneficiary of the policy is the corporation and the intention is that the benefits received would be used to purchase the shares of the corporation held by the insured individual.
You have noted that it is your impression that the benefits received by the corporation in the circumstances described will not be included in the income of the corporation as long as the premiums are not deducted by the corporation.
We would advise that it is the position of the Department that the premiums are not deductible by the corporation in computing its income for tax purposes by virtue of paragraph 18(1)(a) of the Income Tax Act in that the amounts are not laid out by the corporation for the purpose of gaining or producing income from a business or property. Any benefits receivable by the corporation would, similarly, not be included in the computation of the income of the corporation.
Although we trust that our comments are of assistance to you, we would advise that they do not constitute an advance income tax ruling and are, therefore, not binding upon the Department with respect to any particular situation.
Yours truly,
Director
Financial Industries Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1993
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© Sa Majesté la Reine du Chef du Canada, 1993
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