IBAC, TIC jointly working to simplify tax process for commercial clients

The Insurance Brokers Association of Canada (IBAC) and the Toronto Insurance Conference (TIC) have proposed a model ‘Export List’ to make life simpler for brokers’ clients when they apply for an exemption from the excise tax on unlicenced insurance.
Clients of commercial insurance brokers must pay an excise tax when purchasing insurance through foreign, unlicensed markets. Canada Revenue Agency (CRA) allows an exemption from paying the excise tax if clients could prove not enough capacity existed in the licenced Canadian market to insure their risk (therefore making it necessary to go to an unlicensed market to find the capacity).
To qualify for the exemption, CRA requires clients to provide five letters of declaration from insurance companies, recording their refusal to provide coverage, which are dated prior to the inception of the policy.
In its 2008 annual report to IBAC, TIC noted the Canadian Customs and Revenue Agency (CRA) is testing a user-friendly ‘Export List’ created by a joint TIC-IBAC committee. The Export List itemizes insurance coverages that are not available from insurers licensed in Canada.
“The trial will determine whether the CRA will be able to use such a list in the future to streamline the exemption application process and save time and effort for clients, brokers and government staff,” the TIC notes in its report to IBAC. “To date, the results have been positive.”