Canada: Special insurance premium taxes

Canada: Special insurance premium taxes

Canada’s federal government and the governments of some Canadian provinces impose a tax on insurance premiums.

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In Alberta, businesses must self-assess a 50% tax on certain insurance premiums for risks in the province. This requirement applies on premiums covered under insurance contracts with insurers that are not licensed in Alberta. Businesses must generally self-assess and remit this special tax to the Alberta government within 30 days after signing a contract or receiving any policy, interim receipt, or insuring document—whichever occurs first. If the tax is not paid on time, an additional penalty could bring the total amount of the tax to 75% of the premium. 

Other provinces and the federal government also levy similar taxes from the insured persons for insurance contracts, although at lower rates. 

KPMG observation

Businesses need to be aware of the special tax rules for these types of insurance contracts, and properly evaluate the true cost of these contracts and determine that they are meeting their tax obligations. Tax authorities in Alberta and other jurisdictions appear to be increasing their audit activities related to these taxes.

 

Read a January 2017 report [PDF 65 KB] prepared by the KPMG member firm in Canada: Special Insurance Premium Taxes — Meet Your Obligations

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