On December 14, 2015 the CRA responded to the CALU submission of August 2014. In summary, it would appear that the CRA accepts that the advantage tax may not apply to life insurance within an RCA where it can be demonstrated that the insurance benefits provided on death are necessary to fund promised survivor benefits. However, if the purpose of the insurance does not relate to funding RCA benefits, but is for another purpose (for example, key person insurance coverage), an RCA advantage tax may arise, equal to 100% tax on the amount of the advantage. In the CRA response, it is suggested that the cost of equivalent term insurance would be relevant in determining the amount of such advantage.

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