CIFPs: Tax & Budget 2012 Update

Taxation of Insurance Commissions
- Advisors’ Own Policies
Bégin v The Queen (Bégin v The Queen, 2012 TCC 18)
• Deducted premiums paid in order to obtain commissions
• Let policies expire without having to repay commissions
• Profitable = commissions received > premiums paid
• Plan was to “abandon the life insurance policies shortly before
the end of the minimum membership period, which was 24
months.”
• “objective was to earn income by using to his advantage the
system some insurance companies use to pay their
salespersons.”
Judge: Commission earned “while practicing his
profession as insurance agent and is therefore taxable.”
Judge: Premiums were “personal or living expenses” that
are specifically not deductible under the Income Tax Act.