The Excise Tax Act imposes a 10% levy on insurance premiums (other than reinsurance) against a risk in Canada; however, there are a number of instances where Excise Tax does not apply for Lloyd’s business.

The premium is not subject to Canadian Excise Tax if any one of the following conditions are met:

  • The policy does not cover insured(s) resident in Canada
  • The policy does not cover or partially cover a risk ordinarily within Canada
  • There is a Canadian broker involved in the placement and named on the policy documentation / market reform contract (”MRC”)
  • The risk falls within any of the exemptions (detailed on Crystal)

A Canadian “direct assured” tax report should only be completed and submitted to Xchanging if Excise Tax is due (i.e. none of the above conditions are met).

Lloyd's underwriters are responsible for reporting business subject to Excise Tax via the annual return administered centrally by the Lloyd’s Taxation Department; however, they are not responsible for collecting or paying this tax to the Canadian Revenue Agency (“CRA”).  Excise Tax is a charge on the insured and is settled locally to the CRA by the insured.

More information will follow in the new year.

Contacts:

 
Aaron Marston
Indirect Tax Advisor
t: +44 (0)20 7327 5064
e: aaron.marston@lloyds.com

Charlie Dyer
Indirect Tax Advisor
t: +44 (0)20 7327 6836
e: charlie.dyer@lloyds.com