Meaning of a foreign life policy
Your foreign life insurance policy (FLP) for an income year is a life insurance policy issued by an entity that was a non-resident at any time in that income year.
A life insurance policy is one which provides for the payment of benefits upon death, other than death by accident or specified sickness, or on the happening of a specified event which relates to the ending or continuing of a human life. A life insurance policy also includes an instrument which grants an annuity for a term dependent upon a human life. [SECTION 482]
The FIF measures do not apply to the following four categories of life policies:
- an Australian policy, provided that the entity which issued the policy was authorised under the Life Insurance Act 1945 to carry on life insurance business in Australia when it issued the policy
- those policies which provide for payment of benefits on death, or death or permanent disability only
- those policies issued before 1 July 1992 which cannot, after that date, be cancelled, surrendered or redeemed and for which the terms have not, after that date, been altered in any material way, or
- a contract of reinsurance between a resident insurer and a non-resident reinsurer for life insurance policies which provide only life cover. [PARAGRAPHS 482(2)(e) and (f)]
You have an interest in a FLP if you have a legal title to the FLP. [SUBSECTION 483(3)]
Interest in a FLP subject to taxation
Your assessable income for an income year includes FIF income if you had an interest in a FLP at any time during a FLP's notional accounting period that ends in your income year and you were a resident at any time in that income year. [SUBSECTION 485(4)]
The measures do not apply to an interest in a FLP if you disposed of that interest before 30 June 1993. [SUBSECTION 485(5)]