Is the InfiniCap System™ Legal? Understanding CRA's Position on Corporate Life Insurance

Skepticism Is Healthy. Here Is the Answer.

When an incorporated entrepreneur first encounters the InfiniCap System™, skepticism is the appropriate response. Any strategy that promises meaningful tax savings, tax-deferred capital growth, and non-taxable access to liquidity — all simultaneously — should be evaluated with rigor. The question 'is this legal?' is not a sign of distrust. It is a sign of financial intelligence.

The answer is unequivocal: yes, the InfiniCap System™ is fully legal and fully compliant with Canadian tax law and insurance regulation. Every element of the architecture operates within the existing provisions of the Income Tax Act, the Insurance Companies Act, provincial insurance regulations, and CRA administrative positions that have been publicly established for decades.

What the Income Tax Act Actually Says

The tax treatment of corporate-owned life insurance in Canada is governed primarily by sections 12, 20, and 89 of the Income Tax Act, along with the insurance policy exemption test provisions under subsection 12.2. Life insurance policies that meet the exempt test — as all participating whole life policies properly structured under the InfiniCap System™ do — receive preferential tax treatment: internal policy growth is not included in the corporation's taxable income.

The policy loan mechanism is governed by the general debt provisions of the Income Tax Act. A loan received by a corporation is not income — it is a liability. This is not a special carve-out for insurance. It is the foundational tax treatment of debt in Canada. The CRA has explicitly addressed the tax treatment of policy loans in its administrative guidance, and the conclusion is consistent: a properly structured policy loan does not generate taxable income at the time of receipt.

The tax treatment of corporate-owned participating whole life insurance has been established in Canadian law for over 100 years. It is not a grey area, a loophole, or an aggressive tax position. It is a documented, regulated strategy.

The Regulatory Framework: AMF, OSFI, and Assuris

On the insurance side, the instruments used in the InfiniCap System™ are regulated at both the provincial and federal level. In Quebec, the Autorité des marchés financiers (AMF) regulates the issuance of life insurance policies and the licensing of advisors who recommend or implement them. At the federal level, the Office of the Superintendent of Financial Institutions (OSFI) oversees the financial stability of life insurance companies. Policies issued by participating carriers are additionally protected by Assuris, the industry's policyholder protection organization, which covers defined thresholds of policy value in the event of insurer insolvency.

Every advisor who recommends a specific policy as part of an InfiniCap System™ engagement must be licensed under the applicable provincial insurance authority. This is not optional. It is a regulatory requirement that we take seriously and enforce within our team.

What We Do Not Do

Understanding what the InfiniCap System™ does not do is as important as understanding what it does. We do not engage in aggressive tax positions. We do not implement structures that are dependent on grey-area interpretations of the Income Tax Act. We do not promise to eliminate tax liability — only to optimize the structural position within which tax is calculated. Every client architecture is built to withstand CRA scrutiny, because the structures are documented, verifiable, and legally defensible.

We also do not provide legal or accounting opinions. We design capital systems. The review and validation of those systems with your accountant and legal counsel is a standard part of our engagement process — not an afterthought. We invite that scrutiny because the architecture is designed to pass it.