Joe Micallef
Your Business|Managing Your Practice
Premium finance tax tips | Canadian Insurance

Premium finance tax tips

Joe Micallef, CEO of FIRST Insurance Funding of Canada, discusses the tax benefits of premium financing

During this busy tax season, you can add value to the relationship with your clients by offering them some helpful hints they may not be aware of, such as the tax benefits of premium financing.

This is an excellent time to remind your clients that premium financing is a tax effective payment option for their insurance premiums. As business owners, your clients will be interested in knowing the following with respect to their premium financing loans:

Read: Essential tax tips for your clients

•The interest on premium financing loans is fully tax deductible;

•Since the insurance premium and interest are both deductible, they can be classified together or separately as an expense, based on the company’s accounting policies;

•Premium financing is considered off-balance sheet because the loans are funded directly through the broker to the insurance carrier. Since a premium finance loan is not a balance sheet liability, it does not impact a client’s external borrowing covenants or capacity to obtain external financing.

Read: Essential broker tax tips

*Provided in consultation with CW Partners LLP.  Please note,  individual company circumstances and positions are unique, please contact a  tax specialist for more information.

See also: Funding Your Niche