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ARTICLE · 03 APRIL 2017

2017 Federal Budget – International

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The ITA contains rules (the FAPI rules) that are intended to tax investment income earned by a "controlled foreign affiliate" of a Canadian taxpayer when it is earned...

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Crowe MacKay LLP
Crowe MacKay LLP
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Offshore Income from Insuring Canadian Risks

The ITA contains rules (the FAPI rules) that are intended to tax investment income earned by a "controlled foreign affiliate" of a Canadian taxpayer when it is earned, rather than when it is repatriated to Canada.

The FAPI rules deem certain types of business income to be investment income so that it is taxed in Canada immediately, as if it were investment income. Among these rules is one that deems income earned from the insurance and reinsurance of Canadian-source risks by a foreign affiliate (generally a corporation) of a Canadian-resident taxpayer, to be investment income. However, these rules do not apply to similar types of income earned by a foreign branch of a Canadian life insurer.

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