Canada: New GST/HST guidance for insurance intermediaries

Guidance to help insurance intermediaries determine whether their services are GST/HST-exempt “arranging for” financial services

New goods and services tax / harmonized sales tax guidance for insurance intermediaries

The Canada Revenue Agency (CRA) provided guidance to help insurance intermediaries determine whether their services are GST/HST*-exempt “arranging for” financial services.

In addition to providing various technical details related to the concept of “arranging for,” new Notice 325 provides several helpful examples of various insurance intermediaries’ services to illustrate the CRA’s guidance and clarifies that having more than one agreement does not automatically indicate that there are two separate supplies.

The CRA will accept comments on the new GST/HST guidance until 31 October 2023.


In the insurance industry, insurers are often helped by various intermediaries to sell insurance policies to policyholders or perform other tasks, such as managing claims. While the supply of the insurance policy to the policyholder is generally not subject to GST/HST, the services of insurance intermediaries may be taxable or exempt based on their facts and circumstances. These insurance intermediaries may provide a wide range of services, such as selling, promoting, and designing insurance policies, collecting premiums, and managing or training subcontracted agents. Insurance intermediaries must determine whether they are required to collect GST/HST on their services.

Under the GST/HST rules, supplies of financial services are generally exempt from GST/HST, including the issuance of insurance policies by an insurer. Such exempt financial services also include services by intermediaries that are considered to be “arranging for” a qualifying financial service (such as “arranging for the issuance policy”). Some services are excluded from the concept of arranging for a financial service, such as certain administrative services. The concept of “arranging for” a financial service has been the subject of various court decisions over the years.

Various examples in new guidance

The new guidance includes seven helpful examples of services provided by various insurance intermediaries. Examples one to four apply the foregoing principals to the following entities:

  • Managing general agent promoting and selling the insurer’s life and health insurance policies
  • Third-party administrator developing an employee benefit plan to market to employers
  • Corporation, acting on behalf of an insurer, distributes and manages travel insurance policies
  • Corporation that is a third-party administrator sells and renews group life and health insurance policies—under two different agreements

Examples five and six deal with car replacement insurance policies (also known as gap insurance) while example seven deals with insurance claims adjudication and settlement system.

KPMG observation

Although the examples in the new guidance may help insurance intermediaries determine the GST/HST tax status of their supplies, this determination may be difficult when their services have more than one predominant element. Also, intermediaries may find it difficult to apply certain concepts in the new guidance, such as “inextricably intertwined,” “integrally connected” and “highly relies”.

Read an August 2023 report prepared by the KPMG member firm in Canada

*GST/HST = goods and services tax / harmonized sales tax


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