Marine insurance exemption

You don’t pay insurance premium tax on premium payments made as consideration for a contract of marine insurance, other than pleasure craft insurance. However, if you’re a licensed insurer you must still report the contract of insurance.

A payment is made as consideration for a contract of marine insurance if it’s paid for an undertaking, as set out in the insurance contract, to indemnify the insured with respect to marine risks.

What is marine insurance?

Marine insurance is insurance against risks that can occur during a voyage or marine adventure at sea or on an inland waterway. The insurance may also cover a delay or a non-water transit incidental to the voyage or marine adventure.

Marine insurance includes insurance against:

• Liability arising out of bodily injury to, or the death of, a person,
• Liability arising out of the loss of, or damage to, property, or
• The loss of, or damage to, property

A marine adventure occurs when:

• Property that is a ship or goods, or other tangible movable property carried on that ship, are exposed to perils consequent on, or incidental to, navigation, or
• Liability of the owner of, or other person interested in or responsible for, that property can result from perils consequent on, or incidental to, navigation

What isn’t marine insurance?

The following are examples of what doesn’t qualify as marine insurance.

• Insurance entered into by the owner of a wharf, dock, terminal, berth or loading arm that is used for the purpose of moorage or storage of vessels where the contract insures the owner against the loss of, or damage to, the structures or against liability for a vessel moored or stored at the insured’s facilities
• Insurance covering a ship in the course of building, repairing or refitting the ship other than insurance in respect of a sea trial or a delivery voyage
• Insurance covering the liability, the property, or the equipment and machinery of a boat builder, repairer or dealer
• Insurance covering vessels held for sale by a boat dealer other than insurance in respect of a trial cruise, a demonstration or a delivery voyage
• Insurance covering a moored or anchored floating home or building other than insurance in respect of a towing voyage
• Insurance covering logs in water storage or a water storage structure, such as an inter-tidal log storage
• Aquaculture insurance covering stock

Report marine insurance premiums

Licensed insurers

You include gross premiums received, or receivable, for contracts of marine insurance in Box 111 on the Insurance Premium Tax Return of Taxable Premiums. Premiums that qualify as marine insurance, other than the premiums for pleasure craft insurance, are deducted in Box 148.

Unlicensed insurance

If you purchase insurance that qualifies for the marine insurance exemption from an unlicensed insurer, you aren’t required to report the premiums. However, if you purchase other insurance (such as pleasure craft insurance or property insurance) from an unlicensed insurer you must file the Return of Unlicensed Insurance.

Pleasure craft insurance

You pay tax on the premium, or a portion of the premium, for a contract of marine insurance or reciprocal marine insurance that is in respect of a pleasure craft.

A water craft is a pleasure craft if, at the time the insurance contract is entered into, the water craft will be used for relaxation or sport by:

• The owner of the craft
• A charterer under a bareboat charter, or
• A charterer who has hired the entire carrying capacity of the craft together with the services of the owner of the craft, where the owner remains in control of and operates the craft

A water craft isn’t a pleasure craft if, at the time the insurance contract is entered into, the insured:

• Uses but does not charter out the water craft in their business operations, or
• Uses the water craft to carry passengers who purchase tickets for passage without chartering the entire carrying capacity of the craft

However, a water craft that will be used in a business that charters the entire carrying capacity of the craft to persons for their use for relaxation or sport is a pleasure craft.