ETSL68 Frequently Asked Questions Regarding Part I of the Excise Tax Act

Excise Taxes and Other Levies Notice

February 2008

When is the tax not applicable?

Brokers and agents are not required to report contracts of insurance that fall into the following classes:

• marine insurance;
• life insurance;
• personal accident insurance;
• sickness insurance;
• insurance against nuclear risk to the extent that the insurance is not in the opinion of the Commissioner available in Canada; or
• any other contract of insurance entered into after February 19, 1973, to the extent that the insurance is not, in the opinion of the Commissioner, available within Canada.

How do I know how much I owe?

If you are unsure of the amount payable, you will have to contact your broker/insurer and ask for the premium amount that was reported to the Canada Revenue Agency (CRA). Once you receive the premium amount, multiply the premium amount by 10% and this is the amount of tax you owe.

When will I receive a form?

Once the broker/insurer reports all applicable insurance policies, the CRA will enter this information into their system and the insured person identified by the broker/insurer will receive Form B243, Excise Tax Return – Insured. Brokers/insurers must report this information by March 15 of the year immediately succeeding the effective dates of the taxable policies.

Where can I go to receive a form?

If you were reported by a broker/agent/insurer, you will receive Form B243 by mail.

Go to Canada Revenue Agency forms listed by number for printable versions of Form B243 and the following other forms:

• B241, Excise Tax Return – Broker
• E638, Application for Exemption from Tax on Insurance Premiums Imposed Under Part I of the Excise Tax Act
• E638A, Statement of Availability or Declination from Authorized Insurers – Tax on Insurance Premiums under Part I of the Excise Tax Act

Please note that if a broker or agent has paid the tax on behalf of the insured person, Form B243 must still be completed and filed by the insured person.

How do I know which form to use if I am downloading from the Web?

Form B241 is used for brokers or insurers to report any client on whose behalf they placed a contract of insurance:

• with an insurer not incorporated under the laws of Canada or of any province or not formed in Canada;
• with any exchange having its chief place of business outside Canada or having a principal attorney-in-fact whose chief place of business is outside Canada; or
• entered into or renewed through a broker or agent outside of Canada.

Form B243 is used for the individual client to report the policy information to the CRA, including the policy number, amount of the premium and the amount of tax owing on each policy.

Form E638 is used when a client wishes to apply for an exemption from the 10% tax on insurance. Along with this completed form, a client is required to submit a copy of their policy along with letters of declination (or a completed Form E638A) from five authorized Canadian insurers and a completed Form B243.

My broker is located in Canada. Does this notice apply to me?

Although your broker may be located in Canada, they may have placed the insurance with an insurer not incorporated under the laws of Canada or of any province or not formed in Canada or with an exchange having its chief place of business outside Canada or having a principal attorney-in-fact whose chief place of business is outside Canada. The CRA only requires taxable policies to be reported.

You may want to contact your broker and ask with what company and where your insurance was placed and why you were reported to the CRA.

If no broker/insurer reports me, am I still required to file a return and how will I get the form?

If no broker/insurer reports you and you purchased insurance subject to the tax, you are still required to report and pay the 10% tax.

You can get the required Form B243 by going to Canada Revenue Agency forms listed by number or contacting the Specialty Business Returns Section at the following address:

Specialty Business Returns Section 
Atlantic Tax Centre
275 Pope Rd
Summerside PE  C1N 6E7

For more information about filing the return, call the Specialty Business Returns Section at 1‑877‑432‑5472 (from Canada or the United States), 1‑902‑432‑5472 (calls outside Canada and the United States), or 613‑221‑3073 (collect calls).

If you have technical questions about the tax on insurance premiums, call the Excise and Specialty Tax Directorate at 1‑866‑330‑3304.

What is Form E638A, Statement of Availability or Declination from Authorized Insurers – Tax on Insurance Premiums under Part l of the Excise Tax Act?

This form was introduced for the 2007 tax year. This form is currently not a mandatory form, but you may choose to use this form with Form E638. This form is to be completed by five authorized Canadian insurers and submitted with the exemption form.

This form will assist the CRA to render a decision regarding the application for exemption.

There is no reference to reinsurance in the notice.

As per Part I, subsection 4(1) of the Excise Tax Act, reinsurance is not taxable and does not have to be reported. Therefore, there is no reference to reinsurance in this notice.

Further information