In a recently released GST/HST ruling, CRA seems to place a high bar on the exempt treatment of administrative services acquired by an Insurance Company in operating its insurance business. In RITS 154220 (Application of GST/HST to Insurance-related Administrative Services), the CRA effectively takes the view that virtually all administrative services acquired by an insurer are viewed by CRA as excluded from the financial services exemption, and therefore taxable for GST/HST purposes.
The Ruling essentially concludes that the “arranging for” exemption for insurance related services will be limited to exempting the services of licensed insurance agents or brokers, and that other financial intermediaries, that may perform services like assessing or rating insurance applications based on established guidelines provided by the insurer were effectively providing “taxable” services. Effectively, unless the services provided by these third party non-broker intermediaries included an element of underwriting or policy issuance, they were viewed as taxable.
Millar Kreklewetz LLP has lawyers that practice in the GST & Financial Services area, and Rob Kreklewetz and John Bassindale have recent file experience with this particular issue. Please consider calling on us for advice on this subject: Rob Kreklewetz (rgk@taxandtradelaw.com) / John Bassindale (jgb@taxandtradelaw.com).