A Canadian Insurance Broker Needed to Avoid Potential Tax Penalties
If you are a US Insurance Broker who 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 who does not hold a license in Canada will not be able to place business with a Canadian insurance company.
Furthermore, a US broker who 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.
At Front Row, we would be happy to assist you insure your subsidiaries in Canada.
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