Richard CanfieldPodcast Host and IBC Advisor, Ascendant Financial · Authorized Infinite Banking Practitioner | Author of 4 Books

Leaving Canada? Don’t Forget This Tax Rule!

1 Nov 2024 · 1 min

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This short transcript excerpt from the YouTube video "Leaving Canada? Don’t Forget This Tax Rule!" (Richard Canfield) explains that surrendering or terminating a life insurance policy creates a taxable event for Canadian residents equal to the difference between the policy value (example: $100,000) and the adjusted cost basis. For people leaving Canada (non-residents), the same taxable implication applies, but unless they obtain a clearance certificate or prepay taxes the insurance company will withhold 50% of the proceeds.

Questions this video answers

50% (the insurance company will require withholding).

The difference between the policy's cash value (example: $100,000) and the adjusted cost basis.

Chapters

If you were in Canada as a resident and you said, hey, I don't want this anymore, I'm going to get rid of this policy, give me my $100,000, because of the difference in that value and the adjusted cost basis, there would be a taxable event created. That's if you were a resident of Canada. So now if you're becoming a non resident, similarly, there would be a taxable implication in that situation.
Yes, same taxable implication, except the money that you will get in hand, if you are a non resident or non citizen and you've decided to cut the ties on that policy, if you don't get the clearance certificate, prepay the taxes in advance, the insurance company is going to require to withhold 50%. So that's why it's much more beneficial to make sure that you go through the first option. And the insurance company will, of course, cooperate.