Canada's new budget bill amends insurance rules - banning bearer instruments, raising mortgage insurance limits, and clarifying GST/HST treatment for Lloyd's and annuity carriers.
Bill C-31, officially titled the Budget 2025 Implementation Act, No. 2, received its first reading in the House of Commons on May 6, 2026. It is an omnibus bill - the kind of sprawling legislative package that amends 34 statutes at once and tends to bury significant industry changes deep inside hundreds of pages of text. For insurers in Canada, this one deserves a close read.
Sponsored by the Minister of Finance and National Revenue, the bill implements provisions from the federal budget tabled in Parliament on November 4, 2025. Most of its provisions deal with income tax, excise tax, and a range of other federal matters. But tucked inside are a handful of changes that land squarely on the insurance sector.
The most operationally significant may be the ban on bearer instruments. Division 1 of Part 4 amends the Insurance Companies Act - along with the Bank Act and the Trust and Loan Companies Act - to prohibit financial institutions from issuing documents in bearer form. The bill also provides for the replacement of documents that are currently in bearer form. That means any outstanding bearer-form documents held by insurance companies will need to be identified and replaced. It is a compliance obligation, not a guideline.
The bill also adds a new liability shield for federal oversight of insurance companies. Division 2 of Part 4 amends the same three statutes to provide that no action lies against His Majesty in right of Canada and federal government officials for any acts or omissions made in good faith under those Acts. In simpler terms, if a federal official's act or omission affects an insurer and is carried out in good faith, the insurer cannot bring an action over it. The provision applies across the Insurance Companies Act, the Bank Act, and the Trust and Loan Companies Act.
Then there is the tax side of things. Division 1 of Part 3 includes several GST/HST changes relevant to insurers. The bill ensures that the GST/HST applies properly to Lloyd's Insurance. It ensures that special GST/HST rules for financial institutions apply correctly to certain small investment plans, master pension entities, insurers that issue only annuities, and sureties of performance bonds. And it clarifies the application of imported supply rules to financial institutions in respect of insurance policies or loans relating to persons resident in, or property located in, Canada. For carriers with operations involving Canadian-connected policies, that last one is worth flagging to tax counsel.
On the mortgage insurance front, Division 7 of Part 4 amends the National Housing Act to increase the total of Canada Mortgage and Housing Corporation outstanding guarantees that are in force. The same division amends the Protection of Residential Mortgage or Hypothecary Insurance Act to increase the limit for loans that are insured under that Act. For mortgage insurers, these are direct changes to the statutory limits governing how much insured business can be on the books.
There is also a provision touching group insurance. Part 1 of the bill amends paragraph 6(1)(e.1) of the Income Tax Act, addressing the tax treatment of employer contributions to group sickness or accident insurance plans - including plans administered or provided by an employee life and health trust. The amendment concerns amounts contributed by an employer on behalf of a taxpayer to such a plan and how those contributions interact with taxable income.
The full text of Bill C-31 is available at https://www.parl.ca/DocumentViewer/en/45-1/bill/C-31/first-reading.
As of now, Bill C-31 has completed first reading only. No dates have been set for second reading, third reading, Senate consideration, or Royal Assent. As a government budget bill, this type of legislation typically advances through Parliament, though amendments remain possible during committee review.
The insurance provisions are not the headline items in this bill - they rarely are in omnibus legislation. But they are real, they are specific, and they would require action from carriers, compliance teams, and advisors if the bill passes into law.
