CO-1167, Insurance Corporations

An insurance corporation that carries on a business in Québec (i.e., an insurance corporation that, in Québec, exercises any of the rights or powers or pursues any of the objects of a corporation, owns property, or has an establishment within the meaning of section 1 of the Taxation Act) must pay tax on capital determined as follows:

• For each 12-month period, the tax must be calculated
• at the rate of 3% on all premiums respecting life insurance, health insurance and insurance relating to physical well-being, and
• at the rate of 3% on all damage insurance premiums, where the premiums were payable to the corporation (or to the corporation’s agent) with respect to an activity carried on in Québec (other than an activity involving annuity contracts), except on any reinsurance premiums paid to the corporation by another insurance corporation,
• For each taxation year, the tax must be calculated at the rate of 3% on all taxable premiums paid to the corporation (or to the corporation’s agent) to insure a person who was resident in Québec at the time the premiums were paid.

However, a corporation that carries on a marine insurance business in Québec and that underwrites premiums (other than reinsurance premiums) in Québec with respect to the business must pay the lower of the following amounts:

• 5% of the portion of its operating income derived from marine insurance, as represented by the ratio between the net premiums underwritten in Québec and those underwritten in Canada; or
• 3% of all marine insurance premiums payable with respect to an activity carried on in Québec.

1167, 1173.1 and 1174R3

Insurance relating to the physical well-being of a person is an insurance contract under which the insurer agrees to indemnify the insured, otherwise than in a manner accessory to a damage insurance contract, for any injury sustained by the insured in an accident.

1167, 4th par.

The Minister must be informed of every insurance contract affecting property situated in Québec and made with an insurance corporation that is not resident in Canada. Every person who, in carrying out his or her duties, has knowledge of such a contract must, within thirty days, notify the Minister in writing, under oath, of the amount of the insurance and of the amount of premiums that would have been required for such insurance had it been placed with an insurance corporation having an office or place of business in Québec.

1171, 1st par.

The aforementioned person must, when remitting the notice in question, pay to the Minister the amount the Minister would be entitled to receive from a corporation having an office or place of business in Québec.

An insurer engaged in no business other than insurance is exempt from the tax provided for in Book II of Part VI of the Taxation Act if more than 90% of the total gross income of the insurer and of certain persons determined by law (including a related insurance corporation) is derived from premiums collected for the taxation year in respect of insurance contracts relating to property used for farming or fishing, or to residences of farmers or fishermen.

However, an insurer that is engaged in no business other than insurance (and that is not included in the previous paragraph) is exempt from the tax provided for in Book II of Part VI of the Taxation Act with respect to premiums payable on insurance contracts for property used in farming or fishing, or residences of farmers or fishermen, provided the following condition is met: at least 25% of the total gross income of the insurer and of certain persons determined by law (including a related insurance corporation) is derived from premiums collected in respect of such contracts. For the purpose of this exemption, gross income must be determined on the basis of the net amount after subtraction of reinsurance premiums ceded.

1174R2

Note: A fraternal benefit society that is an insurer is exempt from the tax payable under Part VI of the Taxation Act only with respect to premiums payable relating to an insurance business other than a life-insurance business.

"Fund of an uninsured employee benefit plan" means the aggregate of contributions that were made during a taxation year under the uninsured employee benefit plan, provided the aggregate of contributions made during any month of that year exceeds the amount required to cover the foreseeable benefits payable in that month and within 30 days after the end of that month.

The following contributions, however, are excluded from the plan:

• administration fees paid to the plan administrator;
• interest on taxable premiums;
• an amount paid to make up a deficit respecting the plan (regardless of whether the plan was still in effect when the payment was made).

1166

"Amount allocated to the payment of a benefit" means the aggregate of benefits (other than benefits derived from a fund of an uninsured employee benefit plan) paid in a taxation year, under an uninsured employee benefit plan, to the plan beneficiaries.

1166

The tax must not be less than

• $500, in the case of marine insurance corporations;
• $200, in the case of reciprocal or mutual insurance corporations;
• $600, in the case of
• life-insurance corporations,
• insurance corporations transacting in both marine insurance and in another type of insurance (except life insurance), and
• all other types of insurance corporations.

1167, 2nd par.

Where an insurance corporation must pay the minimum amount of tax for both

• a 12-month period ending in a given taxation year, and
• that taxation year,

the aggregate of amounts payable is $600.

1173.3*

The term "premium" means

• an amount payable as consideration in respect of an insurance contract, including the first premium and every other premium payable thereafter under the contract;
• premiums deposits, assessments, registration fees, contributions of members and any other compensation given to benefit by an insurance contract.

1166

The term "taxable premium" refers to a fund of an uninsured employee benefit plan and to an amount allocated to the payment of a benefit.

The following amounts must be included in taxable premiums:

• administration fees paid to the administrator of an uninsured employee benefit plan;
• interest on taxable premiums;
• the amount paid to make up a deficit respecting an uninsured employee benefit plan, regardless of whether the plan was in effect when the payment was made.

1166

An "uninsured employee benefit plan" is a plan that provides protection (against a risk) that could otherwise be obtained by taking out a policy for personal insurance, regardless of whether the benefits are partly insured.

1166

The term "insurance corporation" refers to an insurer within the meaning of the Act respecting insurance and includes any person that carries on an insurance business, and any association or group of persons carrying on such a business, as well as any person, trust, association or group of persons that administers an uninsured employee benefit plan or pays an amount into a fund of such a plan.

1166