From CRA technical interpretation 2015-0618981E5 dated December 3, 2015:
[G]enerally speaking, the fact a taxpayer no longer carries on a business will not preclude the taxpayer from deducting Run-off Insurance premiums in the year they are paid, provided the insurance only relates to advice or work the professional did pre-retirement during the ordinary course of the professional’s business operation. The premiums must still conform with the Act’s provisions regarding deductibility in order to ultimately be deductible.
Postscript added January 13, 2016, further to an interesting discussion on the foregoing with Craig Burley:
- What happens where a professional carried on her practice through a professional corporation but the professional corporation is wound-up soon after retirement? The professional’s personal liability remains but does the source (the entity that carried on the practice and earned income from it)? In other words, can the professional deduct run-off premiums personally in respect of her PC’s practice?
- What happens where a professional sells his practice by selling the shares of his PC? Again, the professional’s personal liability remains, but, again, the source appears to be gone.
