It there a tax on home insurance?

I am often asked - is there tax on insurance premiums.

The tax on insurance premiums is hidden. The fact is, every insurance premium paid is taxed; including life insurance, health insurance, fire insurance and even warranty contracts.

Most of the time you deal with an insurance company that is licensed in both Canada and the Province you reside in.   If the insurance company is licensed in the province they have to include the tax in your premium.

It is the responsibility of the insurance company to collect the tax and remit it if they are provincially registered.   

If the insurance company is licensed in Canada but not in your province then you - the tax payer - are responsible for submitting the premium tax by filing a special tax return.  The tax is often higher - usually around 10% if the company is registered in Canada. 

If you deal with an insurance company that is not registered in Canada you may have a 50% premium tax to pay with fines running another 50% if you do not voluntarily remit the tax on time.

The Fire Tax is levied under Fire Prevention Act or similar legislation of each jurisdiction.   This money is supposed to be used for fire prevention initiatives.

How much premium tax do you pay? Below is a breakdown of the tax by type of insurance and province.

I know that the total premium taxes collected in Saskatchewan last year was $100 Million.   I have been unable to find the total in Alberta (it does not appear on any provincial web site or budget, in fact it is very hard to even find the premijm tax rates) but it would be around $300 Million.