As an incentive for the sale of exempt life insurance policies (having a savings and investment component) a life insurance brokers would pay to clients purchasing the policies an amount equal to the first-year’s commission earned by the broker from the life insurance company.
The Directorate indicated that the incentive payments were includable in the income of such clients under s. 12(1)(x) (absent any election made under s, 12(2.2) respecting the premiums paid) given inter alia that they were received by such clients “in the course of earning income from … property,” noting in this regard that the expression “in the course of” had been interpreted expansively in Wisener (73 DTC 5065) and in Yonge-Eglinton, and further stating:
[A] life insurance policy is a source of income, that is, property acquired for the purpose of earning income from property, whether or not the life insurance policy is an exempt policy.