GUIDE FOR COMPLETING THE INSURANCE PREMIUM TAX RETURN - 2004 and SUBSEQUENT YEARS
THIS GUIDE IS NOT INTENDED TO REPLACE THE INSURANCE PREMIUM TAX ACT . IF THERE IS ANY CONFLICT BETWEEN THE WORDING USED IN THIS GUIDE AND THE LEGISLATION, THE LEGISLATION SHALL PREVAIL.
This guide provides information on the preparation of the Insurance Premium Tax Return ("IPT Return") for 2004 and subsequent calendar years. The IPT Return must be completed by all insurers who are subject to tax under the Insurance Premium Tax Act (IPT).
If you require further information, contact the Ministry of Finance, Income Taxation Branch, PO Box 9444 Stn Prov Govt, Victoria BC V8W 9W8, Telephone 250 953-3082 or Fax 250 356-0434 or toll free 1 800 663-7867
General Information
Instructions for filing an IPT Return
Completing the IPT Return
Section 1: Summary of IPT payable
Section 2: Calculation of Tax on Life and Health Premiums
Section 3: Calculation of Tax on Property and Automobile Premiums
Section 4: Calculation of Other Premiums
GENERAL INFORMATION
The return must be filed by every taxable insurer which means:
(a) an insurer that has or is required to have a business authorization under the Financial Institutions Act (FIA) to carry on insurance business in British Columbia,
(b) a prescribed insurer, being The Insurance Corporation of British Columbia, or
(c) a member of a prescribed class of insurers described as,
1) persons who are members of a reciprocal exchange that hold a valid permit under FIA, or
2) companies that are registered under the Insurance (Captive Company) Act
Instructions for Filing an IPT Return
A signed copy of the IPT Return must be filed with the Ministry of Finance, Income Taxation Branch, PO Box 9444 Stn Prov Govt, Victoria BC V8W 9W8, on or before March 31st of the subsequent calendar year.
The postmark date, or the date a courier delivers the return, will be accepted as the filing date.
The following items must accompany the IPT Return:
1) where there is a balance of tax owing, a cheque made payable to the Minister of Finance,
2) captive insurance companies must submit Exhibit # 7 - Premium Schedule, as filed with the Financial Institutions Commission (FICOM);
3) companies other than Captive Insurance Companies must submit copies of exhibits detailing premiums written and dividends paid as filed with FICOM.
Payment of IPT Installments and Final Remittance
A taxpayer whose tax payable for the preceding calendar year exceeded $ 25,000 is required to make installments by June 15th, September 15th and December 15th in each year, as follows:
(a) 25% of the tax that the taxpayer paid in respect to the preceding year, or
(b) 25% of the taxpayer's estimated tax payable for the current calendar year.
The final balance of tax owing, net of any installments paid, must be remitted by the corporation on or before the due date of March 31st of the IPT Return.
Installment Interest :
If a taxpayer fails to pay an installment by the due date, the taxpayer must pay interest on the amount of the installment calculated from the installment due date until the earlier of the date the payment is made and the due date of the return for the taxation year the installment relates to.
If a taxpayer elects to pay installments using method (b) above, and the amount of each of those installments is less than 25% of the taxpayer's tax payable for the current calendar year, the taxpayer will be charged interest on that difference, calculated from the installment due date until the return due date of March 31 st .
Interest on unpaid balances :
If a taxable insurer fails to pay a balance of tax owing by March 31 st interest will be calculated from that due date until payment is made.
Late Filing Penalty :
If a taxable insurer does not file a return by March 31 st , a penalty equal to 5% of the amount of unpaid tax to a maximum of $ 500 will be assessed.
The following insurers are exempt:
a) a fraternal benefit society; and,
b) a purely mutual corporation in respect of any year in which at least 50% of the net premium income in British Columbia of the mutual corporation is derived from the insurance of farm property or wholly derived from the insurance of churches, schools or other religious or charitable institutions.
COMPLETING THE IPT RETURN
Account Number
The IPT account number is preprinted on the Branch's form. If using a generic form or software generated form, enter the IPT account number in the space provided.
Ensure your account number is recorded on all pages and schedules submitted.
Do not use a photocopy of a return which has been preprinted for another taxpayer or for another taxation year.
Taxpayer Requested Adjustment
Indicate if this is a Taxpayer Requested Adjustment to the return.
Name of Taxpayer
Complete the change of address information space if the name and / or address of the taxpayer differ from the last filed return,
Computer Software Generated Form
Indicate if the return is prepared using a computer software program. Computer software programs used to generate Branch forms must have been previously approved by the Branch.
Federal Business Number
Enter the taxpayer's federal business number.
Start / End of Taxation Year
Taxation year is defined as a calendar year (January 1 to December 31). Enter the start and end date of the applicable taxation year.
First Year of Filing
Indicate if this is the taxpayer's first year of filing an IPT return; if not, indicate the taxation year of the last return filed. If first year, then enter commencement date.
Incorporation Date / Amalgamation Date
First-time filers should indicate the date of incorporation.
If this is the first return of an amalgamated corporation, enter the date of amalgamation and submit the articles / certificate of amalgamation.
A new account number will be assigned in both circumstances.
Final Taxation Year
Indicate if this is a final return. If yes, indicate the reason in the space provided and enter date of cessation.
Exemption
If corporation is exempt, complete the calculation to net taxable premiums and indicate nature of exemption.
Section 1: Summary of IPT Payable
This section summarizes the taxpayer's insurance premium tax payable and payments made for the respective taxation year.
Box 1A: Tax payable on life and health premiums
Enter the tax payable on life and health premiums from Box 2G.
Box 1B: Tax payable on property and automobile premiums
Enter the tax payable on property and automobile premiums from Box 3H.
Box 1C: Tax payable on other premiums
Enter the tax payable on other premiums from box 4G
Box 1D: Insurance premium tax payable
Add the amounts in Boxes 1A, 1B and 1C to calculate the total insurance premium tax payable for the taxation year and enter the total in Box 1D.
Box 1E: Payment made by installments
Enter the total of all installments paid during the year.
Box 1F: Application of Prior Years' Overpayments
Enter the amount of the prior years' overpayment (if any) which is to be applied to the current year's tax liability.
Box 1G: Subtotal
Add the amounts in Boxes 1E and 1F and enter the total in Box 1G.
Box 1H: Balance
Enter the balance of tax payable or tax refundable after subtracting the total previous payments (Box 1G) from the amount of tax payable calculated (Box 1D).
If there is an amount refundable, enter as a negative.
Box 1I: If Payment Due
If there is a balance of tax payable (Box 1I is positive), enter the amount of the cheque attached to the return.
If the cheque has been sent under separate cover or is postdated, enter NIL.
Box 1J: If Overpayment
If there is a refund of tax (Box 1I is negative), indicate if this amount is to be refunded or applied to the subsequent taxation year.
If neither box is completed, the overpayment will be refunded.
Section 2: Calculation of tax on Life and Health Premiums
The tax payable under this part is 2% of the taxable insurer's net taxable premiums for the year received or receivable under contracts of life insurance, accident and sickness insurance and insurance that indemnifies or compensates for loss of salary or wages that are in respect of persons resident in British Columbia (Box 2F x 2%).
Box 2A: Gross Premiums received or receivable for life, accident, sickness and loss of salary or wages
Enter the gross premiums (including premiums under reinsurance contracts) received or receivable for life insurance, accident and sickness insurance and insurance for loss of salary or wages.
Do not include premiums received as consideration for annuity contracts.
Box 2B: Premiums on reinsurance from licensed companies
Enter the gross premiums on reinsurance received or receivable from licensed companies and attach a schedule showing these companies.
If this schedule is not attached, the deduction will be denied on initial assessment.
Box 2C: Premiums returned to policy holders
Enter the amount of taxable premiums returned to policy holders by the insurer in the taxation year for life insurance, accident and sickness insurance and insurance for loss of salary or wages.
Box 2D: Dividends to policy holders
Enter the amount of the cash value of dividends paid or credited in the taxation year by the insurer to policy holders under contracts of life insurance, accident and sickness insurance, and insurance for loss of salary or wages, in respect of persons resident in British Columbia.
Box 2E: Subtotal
Add the amounts in Boxes 2B, 2C, 2D and enter the total in Box 2E.
Box 2F: Net taxable premiums
Net taxable premiums determined under this section, is the amount, if any, by which the insurer's total taxable premiums for the taxation year (Box 2A) exceeds the total of premiums on reinsurance from licensed companies, premiums returned to policy holders and dividends to policy holders. (Box 2E).
Subtract Box 2E from 2A and enter the balance in Box 2F.
Box 2G: Tax payable on life and health premiums
Tax payable on life and health premiums equals Box 2F x 2%.
Enter this amount into Box 1A
Section 3: Calculation of tax on Property and Automobile Premiums
The tax payable under this part is 4.4% of the insurer's net taxable premiums for the year received or receivable under contracts of insurance related to property situated in or automobiles registered in British Columbia (Box 3G x 4.4%).
Box 3A: Gross premiums received or receivable for property and automobile insurance.
Enter the gross premiums received or receivable for property and automobile insurance.
For the purpose of this return, gross premiums include premiums from a contract of marine insurance, pleasure craft insurance and premiums under a reinsurance contract. Exempt Premiums from a marine insurance contract are deducted in Box 3E.
Box 3B: Premiums on reinsurance from licensed companies
Enter the gross premiums on reinsurance received or receivable from licensed companies and attach a schedule showing these companies.
If this schedule is not attached, the deduction will be denied on initial assessment.
Box 3C: Premiums returned to policy holders
Enter the amount of taxable premiums returned to policy holders by the insurer in the taxation year for property and automobile insurance.
Box 3D: Dividends to policy holders
Enter the amount of the cash value of dividends paid or credited in the taxation year by the insurer to policy holders under contracts of property or automobile insurance in respect of persons resident or property situated in British Columbia.
Box 3E: Marine premiums other than pleasure craft
Premiums received under a contract of marine insurance that is not pleasure craft insurance are exempt. The term “pleasure craft insurance” is defined in the Insurance Premium Tax Act.
Enter the gross premiums received or receivable under contracts of marine insurance other than pleasure craft insurance.
Box 3F: Subtotal
Add the amounts in Boxes 3B, 3C, 3D, 3E and enter the total in Box 3F.
Box 3G: Net taxable premiums
To calculate net taxable premiums, subtract Box 3F from 3A and enter the balance in Box 3G.
Box 3H: Tax payable on property and automobile premiums
Tax payable on property and automobile premiums equals Box 3G x 4.4%.
Enter this amount into Box 1B
Section 4: Calculation of tax on Other Premiums
The tax payable under this part is 4% of the taxable insurer's net taxable premiums for the year received or receivable under contracts of insurance related to assets in or persons resident of British Columbia and not included in the determination of tax payable on life and health premiums (Section 2) or property and automobile premiums (Section 3).
Box 4A: Gross Premiums received or receivable other than reported in 2A or 3A above
Enter the gross premiums (including premiums under reinsurance contracts) received or receivable other than life insurance, accident and sickness insurance, insurance for loss of salary and wages, property and automobile insurance.
Do not include premiums received as consideration for annuity contracts.
Box 4B: Premiums on reinsurance from licensed companies
Enter the gross premiums on reinsurance received or receivable from licensed companies and attach a schedule showing these companies.
If this schedule is not attached, the deduction will be denied on initial assessing.
Box 4C: Premiums returned to policy holders
Enter the amount of taxable premiums returned to policy holders by the insurer in the taxation year other than for life insurance, accident and sickness insurance, insurance for loss of salary or wages, property and automobile insurance.
Box 4D: Dividends to policy holders
Enter the amount of the cash value of dividends paid or credited in the taxation year by the insurer to policy holders under contracts of insurance (other than already deducted in 2D and 3D above) in respect of persons resident or property situated in British Columbia.
Box 4E: Subtotal
Add the amounts in Boxes, 4B, 4C, 4D and enter the total in Box 4E.
Box 4F: Net taxable premiums
To calculate net taxable premiums subtract Box 4E from 4A and enter the amount in Box 4F.
Box 4G: Tax Payable on other Premiums
Tax payable on other premiums equals Box 4F x 4%
Enter this amount into Box 1C
The certification box must be signed and dated by a duly authorized signing officer of the corporation.