The extra costs for insurers will come on top of a new one-time tax on profits earned by Canada’s largest banks and insurers, and a permanent hike to their annual corporate tax rates
, both outlined in the budget last week. These are expected to cost $6.1-million over the next five years, although the hit is less severe than originally forecast in the Liberals’ campaign promises last fall.
“This puts Canada offside every other jurisdiction globally,” he said Monday in an interview with The Globe and Mail. “Companies are going to have to fund this tax liability somehow, and I’m not sure how that’s going to work. So we’re disappointed with the direction they’ve gone here.” The government’s view, as outlined in its request for comment published last year, is that IFRS 17, if adopted for tax purposes with no changes, would “introduce an asymmetrical treatment of profit and losses, as only profits will be deferred through the [new rules].” Insurers would continue to recognize expected losses upfront for tax purposes, the Department of Finance says.
CHLIA says it surveyed companies representing 85 per cent of the life-insurance business in Canada, and more than two-thirds said they’ll see “a substantial increase in taxable income in the 2023 taxation year.”
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