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Insurance Agents & Brokers – completely GST exempted?
The answer is no.
Insurance agents or brokers may be employees of an insurance company, an insurance agency or a brokerage firm, or they may be self-employed persons. They may be involved solely in offering insurance policies, or they may provide a variety of services including risk management, consulting or advisory services. Therefore, it is a question of fact whether they make supplies for GST/HST purposes, and whether those supplies are exempt, taxable or zero-rated.
Where an insurance agent or broker provides an arranging for “financial service”, the service is exempt under Part VII of Schedule V unless it is specifically zero-rated under section 1 of Part IX of Schedule VI. Therefore, the fee or commission received by the insurance agent or broker as consideration for the provision of the arranging for service would not be subject to GST/HST.
Main financial service includes:
*the issue, granting, allotment, acceptance, endorsement, renewal, processing, variation, transfer of ownership or repayment of a financial instrument (e.g., an insurance policy).
*the payment or receipt of money as dividends (other than patronage dividends), interest, principal, benefits or any similar payment or receipt of money in respect of a financial instrument.
*the payment or receipt of an amount in full or partial satisfaction of a claim arising under an insurance policy.An insurance agent or broker may also provide other services including risk management services, estate planning or wealth management services. These services are not financial services. Therefore, these services for which a separate fee may be charged are taxable supplies for GST/HST purposes. An insurance agent or broker who is a GST/HST registrant is generally required to charge the GST/HST on taxable supplies (other than zero-rated supplies) made in Canada. A GST/HST registrant is a person who is registered, or who is required to be registered for GST/HST purposes
