|
Tax
and Revenue Administration
Alberta Corporate
Tax Act
Information
Circular CT-21R1 |
| Last Reviewed: |
November 2004 |
| Produced by: |
Alberta Finance, Tax and
Revenue Administration |
| For more information: |
tra.revenue@gov.ab.ca |
CT-21R1 / November 2004
ALBERTA CORPORATE
TAX ACT INFORMATION CIRCULAR:
INSURANCE CORPORATIONS TAX
This Information Circular discusses the Alberta tax assessed on insurance premiums
under the Alberta Corporate Tax Act (the "Act"). The topics discussed include:
- Part 9 of the Act imposes a tax on corporations carrying on the business of insurance in
Alberta within the meaning of the Insurance Act of Alberta. An exception is
made for fraternal societies that are incorporated for the non-profit purposes of making life,
accident or sickness insurance contracts with members only. For
simplicity, the term "insurer" will be used in this circular to refer to
corporations subject to Part 9 tax.
- The tax is based on the amount of premiums receivable in the taxation year for:
a) property insurance: contracts covering property situated in
Alberta at the time the premiums become payable; and
b) insurance other than property insurance: contracts with, or regarding, persons resident in Alberta at the time the premiums become payable.
"Taxation year" means the fiscal year of the corporation.
- The tax is not payable for:
a) consideration received by a life insurer for an annuity contract,
b) marine insurance premiums,
c) reinsurance premiums received by a
reinsurer, and
d) premiums or portion of a premium not retained by an insurer under a risk
distribution plan.
- The amount of premiums receivable in the taxation year on which the tax is based is
gross premiums receivable (except for amounts described in paragraph 3) during
the year, minus the sum of:
a) premiums returned during the year; and
b) the cash value of dividends paid or credited to policyholders during the year.
- The tax rate for premiums is:
a) 2 percent on accident, life and sickness insurance policies; and
b) 3 percent on all other insurance policies.
- Insurers required to pay the tax for a taxation year must file a return in prescribed form (form AT2095) with Alberta Tax and Revenue Administration ("TRA") on or before the 75th day following the taxation year-end. The return is to be accompanied by a copy of the "Provincial and Territorial Summary of Premiums Written, Dividends and Claims Exhibit", filed with the Superintendent of Insurance. Insurers requiring TRA to acknowledge receipt of their returns must enclose a stamped, self-addressed envelope with the return.
- The tax for a taxation year is due on or before the 75th day following the taxation year-end. If a debit balance exists for any time after that date, interest, compounded on a
daily basis, will be charged on that balance for the time it remains outstanding.
The following options are available for remitting payments to TRA:
- mailed, delivered by courier or hand-delivered to TRA. Remittances should be made payable to the Minister of Finance and accompanied by a Remittance Advice. The effective date of receipt of a mailed or delivered remittance is the date on which it is actually received by TRA. Remittances mailed or couriered to TRA should be sent with adequate lead-time to ensure receipt on or before the due date. If hand-delivered, they should be taken to one of the Alberta Finance offices listed on this circular, between the hours of 8:15 a.m. and 4:30 p.m., Monday to Friday, except government holidays.
- at most financial institutions in Canada, if accompanied by a Remittance Advice. The effective date of receipt is the business day stamped on the Remittance Advice by the institution.
- by wire-transfer. The effective date of receipt is the business date that the funds are received by TRA's bank. For more information on this option, contact TRA at (780) 427-3044 or 310-0000 / (780) 427-3044 (Alberta toll free).
- through internet payment services provided by major financial institutions in Canada. The effective date of receipt is the date that TRA's account is credited. The earliest possible effective date is the next business day. For further details on this option, contact your financial institution or call TRA at the above number.
The interest rates used are the same as those used for corporate income tax. Current interest rates are available here or by contacting TRA.
- If an overpayment of tax occurs, the amount overpaid may be refunded or applied against another liability under the Act, including any outstanding balance in the insurer's income tax account.
- Interest on an overpayment will be calculated from the latest of the:
a) day the overpayment arose,
b) 75th day following the taxation year end, and
c) day on which a complete return for the year was filed
to the day the amount is refunded, repaid, or applied.
- If a return is not filed on time, a late-filing penalty is assessed in the amount of:
a) 5 percent of the tax that was unpaid at the required filing date; plus
b) 1 percent of the tax that was unpaid at the required filing date for each complete
month the return is late, to a maximum of twelve months.
- Although an insurer's return is considered to be filed on the day on which it is received by TRA, a late-filing penalty will not be assessed if a mailed return is received within five working days after the required filing date. A return sent via a courier service will not get a late-filing penalty if it is received within one day of the required filing date. If hand-delivered returns are received anytime after the required filing date, they are considered late-filed.
- If the return is not filed in prescribed form or does not contain the prescribed information, the insurer will be asked to remedy the situation. Any refund interest to which an insurer may be entitled will not begin until the required information has been submitted. If the situation is not remedied as required, the insurer may be subject to prosecution.
- An insurer may be liable for an administrative penalty if TRA finds that the filed return contains false statements or omissions under conditions that constitute gross negligence.
- On court conviction, insurers who wilfully attempt to evade payment of tax are subject to fines. Individuals who are found by a court to be parties to corporate acts of evasion are also subject to fines and imprisonment.
- An insurer who fails to file a return as, and when, required is guilty of an offence and liable on conviction to a per-diem fine, set by the court, for each day of default. Similarly, the directors of the corporation may be charged for failure to file a corporation's return and would also be liable upon conviction to a per-diem fine.
- In assessing the insurance premiums tax, TRA is not bound by a return, or no return, filed. If circumstances warrant, TRA may issue an assessment at variance with a filed return (e.g. in the case of misrepresentation or fraud) or that reflects an estimate of tax payable determined without reference to a filed return (e.g. where previous requests to file have been ignored). Such an assessment is valid and binding and payment will be enforced.
- The following are normal periods in which a return may be reassessed:
a) for a Canadian-controlled private corporation, within three years from the date of
mailing of the notice of assessment; or
b) for all other corporations, within four years from the date of mailing of the notice
of assessment.
Reassessments issued beyond the normal reassessment period are limited to cases where the insurer has filed a waiver to waive the normal reassessment period, has made a misrepresentation that is attributable to neglect, carelessness or wilful default or has committed any fraud in the filing of the return or supplying information.
- An insurer who has questions or disagrees with an assessment or reassessment should first contact TRA to discuss the matter. If the situation cannot be resolved through contact with TRA, and the insurer still disagrees with the (re)assessment, the insurer may file a Notice of Objection within 90 days of the mailing of the Notice of Re-assessment. The Notice of Objection must be sent by certified or registered mail to:
- The disposition of a Notice of Objection may be appealed to the Alberta Court of Queen's Bench. If TRA consents, the insurer may waive its right to reconsideration by way of objection in favour of direct appeal to the Court. Please refer to Information Circular CT-8, "Objections and Appeals" for detailed information about the objection and appeal processes.
- The Act requires insurers to keep their records and books of account in Alberta or at locations approved in writing by TRA. For additional information on
the requirements concerning records and books, please refer to Information
Circular CT-13, "Records and Books".
- Further information and forms are available online at www.finance.gov.ab.ca or by contacting Tax Services.
telephone: (780) 427-3044 (Edmonton)
(403) 297-5200 (Calgary)
toll-free within Alberta: 310-0000 / (780) 427-3044
fax: (780) 422-3770 (Edmonton)
(403) 297-5238 (Calgary)
or write to: TAX SERVICES
TAX AND REVENUE ADMINISTRATION
9811-109 ST
EDMONTON, AB T5K 2L5
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