Businesses that have insurance coverage from insurers outside Canada, or have coverage placed by a broker outside Canada, should ensure they are meeting their cross-border insurance premiums tax requirements. The CRA has recently increased its audit activities related to the annual federal 10% excise tax on cross-border insurance premiums, and is sending excise tax returns to businesses with foreign head-offices. Many businesses with such insurance coverage for risks in Canada, including cyber insurance and property insurance, must pay this tax every year by April 30. Businesses should carefully review their insurance coverage and determine whether they have met all related federal and provincial tax obligations.
As a reminder, many businesses that purchased insurance coverage from insurers outside Canada in 2021, or had insurance coverage from a global insurance policy that an affiliated company acquired in 2021 from insurers outside Canada, were required to self-assess and pay the 10% excise tax by April 30, 2022 to the CRA. Businesses should remember that this tax obligation may also apply to insurance coverage purchased over electronic distribution platforms from insurers outside Canada.
Businesses may also face provincial sales tax (PST) liabilities and insurance premium taxes if they purchased insurance coverage from insurers that are not registered or licensed in certain provinces where they operate. Any related audits are performed by the appropriate provincial tax authorities.
For details, see TaxNewsNow “April 30 deadline reminder – 10% federal cross-border insurance tax”.
We can help
We can help you determine if you have obligations related to insurance premium taxes for insurance coverage in Canada. For more information, contact your KPMG advisor or one of the following Indirect Tax professionals:
Walter Sisti
T: 416-777-3920
E: wsisti@kpmg.ca
Jason Cooper
T: 416-468-7448
E: jasoncooper@kpmg.ca
Simon Proulx
T: 647-777-5318
E: sproulx@kpmg.ca
Nathalie Vanasse
T: 514-840-8050
E: nvanasse@kpmg.ca
Yakoob Vayani
T: 416-777-3933
E: yvayani@kpmg.ca
Information is current to September 26, 2022. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500
