DESCRIPTION
An entity (the paying entity) pays amounts described as insurance premiums to another party (the recipient). 2. The recipient may either pay on amounts to an entity controlled by the paying entity, or effectively hold the funds on the paying entity's behalf. 3. The paying entity and the recipient may be associates or otherwise related entities. 4. Alternatively, an intermediary may be used and the payment channelled through the intermediary to a related party or associate. 5. The recipient and any associated entity are situated overseas, frequently in a tax haven. 6. The paying entity claims a deduction for the inflated insurance premium. 7. Although allegedly for insurance, (a) the amounts paid may be excessive in comparison to any insurance coverage provided, considering the conditions for future purported insurance recoveries, and/or (b) there is no significant transfer of insurance risk. 8. In some cases, the dominant purpose of the arrangement may be to attempt to convert what is in substance an investment of funds into the form of a tax-deductible insurance premium.