On January 1, 2023, new international accounting rules for insurance contracts - known as International Financial Reporting Standards (IFRS) 17 - will come into effect.
IFRS 17 aims to improve the financial reporting of insurance contracts by mandating a consistent framework across countries, industries, and types of insurance contracts. It also aims to provide more transparent and useful information about the value of insurance obligations and the profitability of insurance contracts.
To address these changes, today the government is launching consultations with industry stakeholders on its intention to maintain the current alignment between the taxation of profits and the timing of income earning activities.
In particular, the government is seeking input on how best to enact IFRS 17 in a way that facilitates implementation by insurance companies and is auditable by the Canada Revenue Agency. The government is also seeking views on other potential taxation issues that could arise from the implementation of, or transition to, the new standard. This consultation will assist the government in developing potential modifications to the Income Tax Act and other administrative tools.
