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.
SPLIT DOLLAR LIFE INSURANCE
Question 24
Under a typical split dollar life insurance plan, the company of which the mortality beneficiary is an employee or shareholder, pays that portion of the premium equivalent to the annual increase in the cash surrender value and the employee/shareholder pays the balance, if any. The company is then entitled to the cash surrender value on surrender. On death the employee/shareholder will be entitled to a specified amount and the company will be entitled to an amount equivalent to the case surrender value immediately before death. Is it Revenue Canada's view that the employee/shareholder receives a benefit in the situation described above?
Department's Position
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).
In determining whether an employee/shareholder is in receipt of a benefit in a particular taxation year consideration will be given to the premiums paid by an employee/shareholder, if any, under the policy and the premium cost for equivalent term coverage.
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