November 29th, 2023
Last July, the CRA published its GST/HST Notice 325, Services rendered by certain insurance intermediaries, in part to receive public comments on this notice. The version that considers these comments should be published shortly, as the comment period ended on October 31.
This document, intended for insurance intermediaries, who are sometimes referred to as managing general agents, third-party administrators, or managing general underwriters, has been developed to help these intermediaries determine how to apply GST/HST to their supplies.
It includes a multi-stage analysis.
- Determine whether, under the terms of the agreement, the intermediary is making a single supply or multiple supplies;
- Determine the nature of each supply, in particular by identifying its main component;
- Determine whether the object of the supply is a financial service;
Several explanations are given concerning paragraph l) of the definition of “financial service”, defined in subsection 123(1) of the ETA. In the definition of financial service, this paragraph includes the act of taking steps to perform a service that is covered by another paragraph of the definition, without otherwise being excluded. The GST/HST Technical Information Bulletin B-105 – Changes to the Definition of Financial Service explains several factors to consider when determining whether a supply is a financial service.
GST/HST Notice 325 concludes with several scenarios and examples, where the CRA performs a multi-step analysis based on the process described above.
If you are an insurance intermediary, or do business with an insurance intermediary, we strongly recommend that you read this document. If you have any doubts about your supplies, don’t hesitate to contact one of our professionals.
