Are professionals, who are required to maintain liability insurance for actions taken in the course of their practice for a number of years after they ceased their practice, entitled to deduct the premiums that thereby continue to be incurred by them after the cessation of their business? CRA responded:
[Under] the principle in … Poulin … an expense paid in a year in which a taxpayer is no longer carrying on business may be deducted in that year since the taxpayer cannot be considered to have ceased to carry on business as long as the taxpayer is engaged in following up on actions taken by the taxpayer in the course of carrying on business.
… [P]remiums paid by a taxpayer to maintain liability insurance in respect of actions taken in the course of carrying on the taxpayer's business would be deductible in computing the taxpayer's income.