Five leading insurers could be affected by recent budget proposals from the federal government.
Five leading Canadian insurers won’t be able to avoid taking a hit from a specific anti-avoidance rule under the FAPI (foreign accrual property income) regime.
“It is still too early to definitively determine what the specific regulatory and tax implications would be should the proposal be approved this year,” said an A.M. Best report. It “could potentially have a negative impact to the business profile of the companies whose activities fall under this ruling.”
The intent of the proposal contained in the 2015 budget is to ensure that profits claimed a Canadian taxpayer from the insurance of Canadian risks remain taxable.
The current tax proposal is specifically intended to impact the insurer’s foreign affiliate's income. It focuses on allowing the Canadian risks to be included in calculating the affiliate's FAPI. It also means a foreign affiliate can cedes Canadian risks and receives foreign risks in return.
In this case, the affiliate is considered to have earned a FAPI in respect to accepting Canadian risks.
The Canadian government has extended interested stakeholders to submit comments by June 30, 2015.
“It is still too early to definitively determine what the specific regulatory and tax implications would be should the proposal be approved this year,” said an A.M. Best report. It “could potentially have a negative impact to the business profile of the companies whose activities fall under this ruling.”
The intent of the proposal contained in the 2015 budget is to ensure that profits claimed a Canadian taxpayer from the insurance of Canadian risks remain taxable.
The current tax proposal is specifically intended to impact the insurer’s foreign affiliate's income. It focuses on allowing the Canadian risks to be included in calculating the affiliate's FAPI. It also means a foreign affiliate can cedes Canadian risks and receives foreign risks in return.
In this case, the affiliate is considered to have earned a FAPI in respect to accepting Canadian risks.
The Canadian government has extended interested stakeholders to submit comments by June 30, 2015.
