CRA Notice: Alert on Aggressive Tax Transaction Structures Involving Critical Illness Insurance and Limited Recourse Loans

Recently, the Canada Revenue Agency (CRA) issued a notice highlighting certain aggressive tax transaction structures that use Critical Illness Insurance and Limited Recourse Loans as core elements. While these structures may appear to involve standard insurance purchases and financing arrangements, their economic substance is often designed to allow shareholders to extract funds from their companies at low or no tax, creating significant risk exposure.