Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-35 - INSURANCE BUSINESS  

Division 320 - Life insurance companies  

Subdivision 320-C - Deductions and capital losses  

Operative provisions

SECTION 320-85   Deduction for increase in value of liabilities under net risk components of life insurance policies  

320-85(1)    
A *life insurance company can deduct the amount (if any) by which the *value, at the end of the income year, of its liabilities under the *net risk components of *life insurance policies exceeds the value, at the end of the previous income year, of those liabilities.

Note 1:

Where the value at the end of the income year is less than the value at the end of the previous income year, the difference is included in assessable income: see paragraph 320-15(1)(h) .

Note 2:

Section 320-85 of the Income Tax (Transitional Provisions) Act 1997 makes special provision in respect of the calculation of the value of a life insurance company ' s liabilities under the net risk components of life insurance policies at the end of the income year immediately preceding the income year in which 1 July 2000 occurs.

320-85(2)    

Subsection (1) does not cover any liabilities under:

(a) a *life insurance policy that provides for *participating benefits or *discretionary benefits; or

(b) an *exempt life insurance policy; or

(ba) (Repealed by No 70 of 2015)

(c) a *funeral policy.

320-85(3)    
If a *life insurance policy is a *disability policy (other than a *continuous disability policy), the value at a particular time of the liabilities of the *life insurance company under the *net risk component of the policy is the *current termination value of the component at that time (calculated by an *actuary).

320-85(4)    
In the case of *life insurance policies other than policies to which subsection (3) applies, the value at a particular time of the liabilities of the *life insurance company under the *net risk components of the policies is the amount calculated by an *actuary to be:

(a) the sum of the policy liabilities (as defined in the *Valuation Standard) in respect of the net risk components of the policies at that time;

less

(b) the sum of any cumulative losses (as defined in the Valuation Standard) for the net risk components of the policies at that time.