In certain provinces, a licensed insurance advisor is permitted to pay a portion of the commission earned as a "rebate" to a client purchasing an insurance policy. What is the tax treatment of the rebate to the policy purchaser and to the paying advisor? CRA confirmed its position in 2008-0271381E5 that the insurance advisor will include the full amount of the sales commission in business income under s. 9(1) deduct the premium paid under s. 9 (except as otherwise limited by the Act), and that:
The policy purchaser will include the rebate in income pursuant to paragraph 12(1)(x).