Life insurance companies taxation schedule explanatory notes 2022

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Introduction

These instructions will help you complete the Life insurance companies taxation schedule 2022. They are not a guide to income tax law.

The schedule is to be completed by:

• a life insurance company, or
• the head company of a consolidated group that includes at least one member that is a life insurance company

which derived income from the complying superannuation asset and/or segregated exempt asset classes.

For a consolidated group, the single entity rule is to be disregarded for certain purposes when working out the amounts that are shown on this schedule. See section 713-510A of the Income Tax Assessment Act 1997 (ITAA 1997) for more information.

1 Income – segregated exempt assets (SEA)

Ordinary and statutory income (other than premiums)

If the life insurance company or the head company of a consolidated group derived income from SEA, write at A the total of all ordinary and statutory income, less the premium income that is included at B.

Premiums – exempt life insurance policies

Write at B the total amount of gross premiums received from exempt life insurance policies.

2 Assessable income

In this section

• Premiums from accident and disability and term policies
• Premiums – other life insurance policies
• Total ordinary income – ordinary class
• Total assessable income – complying superannuation class

Premiums from accident and disability and term policies

Write at C the total amount of gross premiums received from:

• accident and disability policies (including continuous disability policies)
• term policies
• the value of assets (including money) relating to the ‘risk rider’ component of life insurance premiums transferred from the complying superannuation asset pool under subsections 320-180(1) and 320-195(3) of the ITAA 1997.

Premiums – other life insurance policies

Write at D the total amount of gross premiums received from all life insurance policies for the ordinary class except for the amounts included at B, C and E.

Write at E the total amount of gross premiums received from complying superannuation life insurance policies.

Total ordinary income – ordinary class

Write at F the assessable income of the ordinary class that is income according to ordinary concepts. This includes premiums included at C and D.

For a consolidated group, the head company includes at F the assessable income that is income according to ordinary concepts for all members of the consolidated group, except for the ordinary income of the complying superannuation class of any life insurance company which is a member of the consolidated group.

Total assessable income – complying superannuation class

Write at G the assessable income that is allocated to the complying superannuation class under subsection 320-137(2) of the ITAA 1997. The total assessable income at G includes both income according to ordinary concepts and statutory income.

The total assessable income of the complying superannuation class at G also includes transfers to the complying superannuation asset pool, as stated in Transfers to complying superannuation asset pool.

TOFA gains in Total ordinary income – ordinary class and Total assessable income – complying superannuation class

If the life insurance company had financial arrangements which resulted in assessable TOFA gains, then:

• write at U the amount of assessable TOFA gains of the ordinary class that are income according to ordinary concepts included at F; for a consolidated group, the head company includes the amount for all members of the consolidated group that are included at F
• write at T the amount of assessable TOFA gains of the complying superannuation class included at G.

3 Allowable deductions

In this section

• Tax losses claimed – ordinary class
• Tax losses claimed – complying superannuation class
• Total allowable deductions – ordinary class
• Total allowable deductions – complying superannuation class

Tax losses claimed – ordinary class

Write at I the amount of tax losses of the ordinary class claimed as a deduction under subdivision 36-A of the ITAA 1997.

For a consolidated group, the head company includes at I the amount of tax losses of the ordinary class claimed as a deduction under subdivision 36-A of the ITAA 1997 by the consolidated group.

If the life insurance company is not a member of a consolidated group, it may need to complete a Losses schedule 2022 (NAT 3425) showing tax losses of the ordinary class and all other relevant items. For more information, see Losses schedule instructions 2022.

For a consolidated group, the head company may need to complete a Consolidated groups losses schedule 2022 (NAT 7888) showing tax losses of the ordinary class at item 3 Tax losses deducted in part A and all other relevant items. For more information, see Consolidated group losses schedule instructions 2022.

Tax losses claimed – complying superannuation class

Write at H the amount of tax losses of the complying superannuation class claimed as a deduction in accordance with section 320-141 of the ITAA 1997.

The life insurance company may need to complete a Losses schedule 2022 (NAT 3425), or if it is a member of a consolidated group, the head company may need to complete a Consolidated groups losses schedule 2022 (NAT 7888). In either schedule:

• do not show any tax losses claimed in the complying superannuation class, but
• show the following in part D of the losses schedule
  • complying superannuation class tax losses carried forward to later income years
  • complying superannuation class net capital losses carried forward to later income years.
   

For more information, see:

• Losses schedule instructions 2022
• Consolidated group losses schedule instructions 2022

Total allowable deductions – ordinary class

Write at J the total allowable deductions for the ordinary class. For a consolidated group, the head company includes at J the total allowable deductions for the ordinary class for all members of the consolidated group.

This label is the total allowable deductions of the life insurance company or the consolidated group, less the total allowable deductions of the complying superannuation class. The total allowable deductions of the ordinary class also includes transfers to the complying superannuation asset pool and SEA as stated in:

• Transfers to complying superannuation asset pool
• Transfers to SEA

Total allowable deductions – complying superannuation class

Write at K the total allowable deductions for the complying superannuation class. This includes:

• deducted tax losses of the complying superannuation class determined in accordance with section 320-141 of the ITAA 1997
• deductions other than tax losses determined in accordance with subsection 320-137(4) of the ITAA 1997.

4 Taxable income or loss

Taxable income or loss

Write at L the taxable income or loss in the ordinary class. For a consolidated group, this is the taxable income or loss in the ordinary class for all members of the consolidated group.

If the life insurance company has a tax loss in the ordinary class, print X in the box at the right of the amount at label L.

Write at M the taxable income or loss in the complying superannuation class (that is, label G less label K).

If the life insurance company has a tax loss in the complying superannuation class, print X in the box at the right of the amount at label M.

5 Transfers

Transfers to complying superannuation asset pool

Write at N the transfer value of assets (including money) transferred by the life insurance company to the complying superannuation asset pool under subsections 320-180(3) and 320-185(1) of the ITAA 1997.

Transfers from complying superannuation asset pool

Write at O the following amounts:

• the transfer value of assets (including money) transferred by the life insurance company from the complying superannuation asset pool under subsection 320-180(1) of the ITAA 1997
• assets transferred (including money) under subsection 320-195(3) of the ITAA 1997 having a total transfer value equal to the following
  • all fees from investment-linked policies
  • policy fees and administration fees from other than investment-linked policies
  • premium-based fees from other than investment-linked policies.
   

Do not include the value of assets (including money) relating to the ‘risk rider’ component of life insurance premiums transferred from the complying superannuation asset pool under subsections 320-180(1) or 320-195(3) of the ITAA 1997.

Transfers to SEA

Write at P the transfer value of assets (including money) transferred to the life insurance company’s SEA under subsections 320-235(3) and 320-240(1) of the ITAA 1997.

Transfers from SEA

Write at Q the following amounts:

• the transfer value of assets (including money) transferred from the life insurance company’s SEA under subsection 320-235(1) of the ITAA 1997
• assets (including money) transferred under subsection 320-250(2) of the ITAA 1997 having a total transfer value equal to the following
  • all fees from investment-linked policies
  • policy fees and administration fees from other than investment-linked policies
  • premium-based fees from other than investment-linked policies.
   

6 Exploration credit tax offset

Write at R the total exploration credit tax offsets allowance under section 418-15 of the ITAA 1997.

Taxpayer’s declaration

If you do not lodge this schedule with your tax return, you must sign and date the schedule.

Include in the declaration a signature, date, name and telephone number for the public officer.

Help in completing this schedule

If you need help to complete this schedule, contact the Large Service Team at the ATO on (02) 9685 8735.

If you are preparing the tax return for a life insurance company, these instructions will help you to complete the life insurance companies taxation schedule.