Canada’s Department of Finance on May 28 launched a consultation on the tax implications of new international accounting rules for insurance contracts.
The new international rules on financial reporting of insurance contracts – International Financial Reporting Standards (IFRS) 17 – come into effect on January 1, 2023. The new rules mandate a consistent reporting framework across countries, industries, and types of insurance contracts.
Canada Finance is seeking comments on potential taxation issues related to the implementation of IFRS 17 with an aim “to maintain the current alignment between the taxation of profits and the timing of income earning activities.”
It specifically asks how it can best enact IFRS 17 in a way that can help insurance companies implement the changes while ensuring the ability of the Canada Revenue Agency to audit them.
The government will use the feedback it receives in considering potential changes to the Income Tax Act and administrative tools.
Comments are due July 30.
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