A self-employed financial products broker receives commissions for the sale of life insurance policies that he takes out for his own benefit (the persons insured are members of his family and the beneficiaries are either him or his spouse). The broker is responsible for the payment of the related premiums. Before finding that these premiums were not deductible in computing his income from a business, CRA stated:
Where an insurance broker, who is self-employed, receives a commission from the sale of a life insurance policy owned by him …CRA … is generally of the opinion that this income does not have to be included in the calculation of the broker's business income as long as the broker is required to pay the premiums relating to the policy. Our position is the same in the case of a critical illness insurance policy.
Notwithstanding our position stated above, we are of the view that … the commission received or receivable could be considered taxable … where the amount of the commission is substantial. …
Thus, because of the amounts of commissions received, it is likely that they will have to be included in the broker's income for the year in which they are received.