Upcoming changes to insurance taxation rules in Canada

Aceti & Associates - Monday, August 01, 2016

There are upcoming changes to tax legislation affecting life insurance products that will have a large impact on estate planning for many of our clients. It is now a good time to  consider additional life insurance with the goal of reducing tax on funds withdrawn from corporate holdings.

The Federal government is introducing new rules effective January 1, 2017 that will, among other changes, reduce the amount of the benefit that can be taken tax free. Where your provider can offer a sufficient benefit payout to cover the cost & provide decent returns it may be beneficial to get a new policy before January 1, 2017 & enjoy being grandfathered under the old rules. Generally speaking a portion of the benefit paid can be withdrawn from your company tax free using the CDA account, subject to certain restrictions.