A Canadian Insurance Broker Needed to Avoid Potential Tax Penalties

Posted by David Hamilton on Feb 7, 2012 2:55:00 PM


If you are a US Insurance Broker that has a client with a Canadian subsidiary, Canadian tax law requires that:

  • The policy must be issued by a licensed Canadian insurer
  • The premium must be paid by the Canadian subsidiary directly to a licensed Canadian broker who then  must pay the Canadian insurer
  • If an unlicensed insurer is used, Provincial tax penalties may be as high as 50% of the premium and an additional Federal tax of 10% of the premium will also be levied

A US Insurance Broker that does not hold a license in Canada will not be able to place business with a Canadian insurance company. Furthermore a US broker that does not hold a Canadian license is not allowed to provide insurance advice to a Canadian company – even if it is a subsidiary of a US parent company. To do so will incur a premium tax and penalties that are payable by the subsidiary. 

A broker licensed and domiciled in Canada will make sure that your client complies with all insurance regulations so that the policy will respond when required. A Canadian Entertainment Insurance Broker will also ensure that the premiums qualify for any applicable tax credits.

This article explains the law well and in detail l and that the CRA (the equivalent of your IRS) is being stricter about enforcing it- https://www.canadianunderwriter.ca/features/excise-tax-extends-its-reach/.

At Front Row, we would be happy to assist you insure your subsidiaries in Canada.

Please contact David Hamilton:  604-684-3456 or e-mail david@frontrowinsurance.com

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