Commission income earned by life insurance broker was taxable

Tax - Income tax - Employment income

Taxpayer was life insurance broker employed by G Inc., was majority shareholder of G Inc. and was director and officer. Commissions in respect to any life insurance policies placed through services of taxpayer were paid to, and received by, G Inc. and G Inc. paid salary to taxpayer for services he provided on its behalf. In 2014, taxpayer purchased life insurance policy with benefit amount of $1,000,000 on his own life. Insurer paid first year commission in amount of $20,822.41 to G Inc. and bonus commission of $36,439.22 was paid in respect of policy by C Ltd. to G Inc.. In 2014, G Inc. paid salary of $111,617 to taxpayer and relying on Canada Revenue Agency (CRA) administrative policy, taxpayer deducted from his salary $57,261.53, which represented total of commissions in respect of policy. CRA issued reassessment to disallow deduction of commissions. Taxpayer appealed. Appeal dismissed. Nothing in s. 8 of Income Tax Act permitted taxpayer, in computing his income from employment in 2014, to deduct commissions received by G Inc. in respect of policy. Commission income earned by life insurance broker was taxable. If CRA determined that particular taxpayer did not qualify for favourable treatment set out in CRA’s administrative policy, taxpayer’s appeal could not be decided in manner that was inconsistent with Act. Even if administrative policy could be applied, taxpayer did not come within that policy.

Ghumman v. The Queen (2019), 2019 CarswellNat 2252, 2019 CarswellNat 2324, 2019 TCC 125, 2019 CCI 125, Don R. Sommerfeldt J. (T.C.C. [Informal Procedure]).

Case Law is a weekly summary of notable civil and criminal court decisions by the Supreme Court of Canada, the Federal Court of Canada and all Ontario courts. These cases may be found online in WestlawNext Canada. To subscribe, please visit store.thomsonreuters.ca

Free newsletter

Our newsletter is FREE and keeps you up to date on all the developments in the Ontario legal community. Please enter your email address below to subscribe.

Recent articles & video

More civil liability for privacy complaints in Ontario after landmark case

Privacy Commissioner could overhaul artificial intelligence laws amid mounting privacy concerns

Cynthia Khoo to research cybermisogyny for women's rights org

Windsor Law expands class action clinic to meet growing demand

Human rights monitoring falls in the law society's mandate, says founding member of group

Condo board capacity still unsettled after decision on notice and nullity

Most Read Articles

More civil liability for privacy complaints in Ontario after landmark case

Human rights monitoring falls in the law society's mandate, says founding member of group

Privacy Commissioner could overhaul artificial intelligence laws amid mounting privacy concerns

Juror's alleged letter praising Crown's appearance does not amount to bias, appeal judges say