Cashing in Insurance Policy

Nova Scotia tax, In easy terms, please explain how I figure if I need to pay tax on insurance that I cashed in.

Over the years i paid in premiums 1000.00 per year for approx 20 years. Some years they took the payment out because it was a tough year and couldn't pay the premium. I generally got an annual dividend of approx 500.00 a year.

This year I closed it out (had to) by getting the balance left of 14k. I had taken 3k as a loan the year before but didn't pay it back. The policy itself was for 100,000.00 So I have paid in approx 20,000 and had dividends of approx
5000.00 (didn't get 500.00 for the first few years) I have plenty of capital gains exemption left, can't I use that.

Also should not the Insurance Company have taken out the tax if indeed, I am required to pay some.
is it taxable the same as income. Thanks a lot

Click here to post comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Income Tax Questions.

Please subscribe to my monthly newsletter, Bookkeeping Basics E-zine. It tells you each month about the new information that I have added, including some great tips and advice from myself and other Bookkeeping Basics readers.

Enter Your E-mail Address
Enter Your First Name (optional)

Don't worry — your e-mail address is totally secure.
I promise to use it only to send you Bookkeeping Basics E-Zine.