Ensure the tax implications of owning a life insurance policy corporately are understood and taken into consideration.

This Tax Topic will review valuation issues involving corporate-owned insurance, specifically, the valuation of shares held by a deceased shareholder for capital gains purposes. Certain other valuation issues are also mentioned.

This Tax Topics will review valuation issues involving corporate-owned insurance, specifically, the valuation of shares held by a deceased shareholder for capital gains purposes. Certain other valuation issues are also mentioned.

Where the Capital Dividend Amount is less than the full redemption amount.

Minimize tax burden on death and on distribution of assets.

Corporations purchase life insurance for many reasons (e.g., fund a buy-sell agreement, use as collateral, cover loss of key employee).

Consider these issues and tax implications where a corporation acquires an exempt life insurance policy but intends to access its cash value through collaterally assigning it to a bank in the future.

Information on whether a policy should be personally- or corporately-owned.

The Corporate Estate Bond is a financial planning strategy designed to increase the size of your client's estate by moving surplus corporate dollars exposed to tax into a tax-deferred life insurance policy.

Many business owners don’t even know they have a problem – do you? Understanding the issues can mean financial health for you, your business and your family

The article navigates post-mortem planning with testamentary spousal trusts, focusing on tax efficiency, pipeline strategies, and CRA rulings on capital gains and loss denial rules.

This article discusses a US Supreme Court case on the impact of corporate-owned life insurance on estate taxes, highlighting alternatives like the criss-cross purchase method for better tax outcomes.

The Canada Revenue Agency (“CRA”) Roundtable was held on October 10, 2024 during the annual conference of the Association de Planification Fiscale et Financière (“APFF”). There were several questions that were asked, and there were two specific questions that were relevant to life insurance and taxation.

Dive into a real-life case with complex tax implications. Explore how Holdco, Opco, and Sisterco navigate life insurance ownership and beneficiary designations. Learn crucial insights into structuring insurance within corporate groups to optimize tax efficiency and ensure suitability for future needs.

The CRA provided an update on safe income and subsection 55(2) at the 75th annual CTF tax conference. The updates brought fresh perspectives on safe income and reversals of some previously issued CRA positions including phantom income, accrued gains and more.

At the 2023 APFF Conference, the CRA discussed transferring life insurance policies from partnerships and subsequent donations. It clarified the tax implications, resulting in fair market value applying to a transfer out of a partnership and advised that the time the partnership held the policy would not be included for the purposes of the donation rules in 248(35).

What happens when connected corporations transfer a life insurance policy as a dividend-in-kind with a trust interposed? That was the topic of discussion at the 2023 APFF CRA Roundtable on the taxation of financial strategies and financial instruments. The discussion highlighted some inconsistent tax outcomes, suggesting a need for better ways to transfer shares without causing tax issues.

The article examines a situation where an operating company (Opco) was designated beneficiary under life insurance policies owned by one of its shareholders (Holdco) and a sister company (Sisterco). Opco paid the premiums under the policies and Holdco and Sisterco were assessed shareholder and indirect benefits including the amount of premiums paid by Opco in their income. The Tax Court upheld these reassessments.

This article discusses a series of Canada Revenue Agency (CRA) Roundtable responses and technical interpretations on different owner and beneficiary structures involving corporate-owned life insurance. It focuses on Holdco ownership and Opco as beneficiary of a policy in detail. Benefit conferral has not been ruled out.

This article discusses the tax consequences of a shareholder paying and their corporation receiving a guarantee fee for the use of the corporation’s asset as security for a personal loan.

Options and considerations when transferring a term life insurance policy from a corporation to an employee or shareholder.

This article considered comments from the Canada Revenue Agency in the context of corporate-owned life insurance where life insurance shares exist. The possibility of taxable benefits was not ruled out.

Subsection 70(5.3) of the Income Tax Act (ITA) deems the fair market value (FMV) of certain life insurance policies to be their cash surrender (CSV) when valuing property on certain deemed dispositions. Read about the CRA’s views on whether this rule applies to deem the value of life insurance when immigrating to Canada in certain scenarios.

In Boyd B. Harding v The Queen, 2022 TCC 3,) the Tax Court of Canada (the Court) addressed the issue of shareholder benefits under subsection 15(1) of the Income Tax Act (the Act) in the context where a corporation pays the premiums on an insurance policy on the life of the shareholder, and where the beneficiaries are individuals related to the shareholder.

How Estate Administration Tax (EAT) is calculated where an estate holds shares of a company with corporate-owned life insurance. No guidance is provided by the Court.

Corporate-owned life insurance has become an important planning tool in meeting business owners’ estate-planning goals and objectives.

When business owners are shareholders of a corporation and decide to go their separate ways, they may need to transfer some of the corporate assets to a new corporation in a “divisive reorganization”.

Learn when the back-to-back loan rules do not apply to shareholder borrowing.

Get clarification on back-to-back loan rules.

Shareholder borrowing using corporate owned life insurance as security and back-to-back loan arrangements.

In Golini v The Queen (2016) TCC 174, the Tax Court found an immediate shareholder benefit in respect of a personal borrowing by Mr. Golini (“Mr. G”), in the 2008 taxation year, which used his corporation’s assets as security

A summary of the final rule changes to adjust the CDA for transfers into a corporation and for different owner and beneficiary structures

Changes to the taxation of eligible capital property announced in the 2016 Federal Budget.

Unofficial update from CALU Roundtable on various insurance related topics.

Fair market value of corporate life insurance and the capital gains exemption.

Tax attributes of corporate owned life insurance, CDA, Capital Gains exemption.

Tax consequences of corporate owned/beneficiary life insurance.

Factors to consider in assessing the value of a shareholder benefit where beneficiary designation of corporate-owned life insurance is changed from the corporation to a shareholder.

Shareholder benefit for payment of premium not for policy loan.

Get clarification on deemed disposition, trusts and corporate-owned life insurance.

Corporate Owned Life Insurance and shareholder benefits

Tax issues where corporate owner is different from corporate beneficiary.

Consider these tax issues when the corporate owner and beneficiary are different.

Review corporate beneficiary designations following this CRA reversal.

Quebec is about to introduce a bill mandating corporate transparency

Remind clients why they need a Buy-Sell agreement in writing.

How much ‘key person’ life insurance is enough?

New info on concept-related issues including competitive analysis, concept assumptions, and software instructions.

This bond concept compares a corporate-owned life insurance policy estate value with an alternative corporate-owned investment.