Income Tax Assessment Act 1997

Part 3-90 inserted by No 68 of 2002, s 3 and Sch 1 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec 700-1 of the Income Tax (Transitional Provisions) Act 1997 ).

Div 713 inserted by No 117 of 2002, s 3 and Sch 5 item 6, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec 700-1 of the Income Tax (Transitional Provisions) Act 1997 ).

Subdiv 713-L inserted by No 16 of 2003, s 3 and Sch 6 item 1, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec 700-1 of the Income Tax (Transitional Provisions) Act 1997 ).

S 713-555 repealed by No 56 of 2010, s 3 and Sch 5 item 196, applicable on and after 1 July 2002. S 713-555 formerly read:

SECTION 713-555 Transfer from segregated exempt assets because policyholder and life insurance company are in group  
Application

713-555(1)
This section applies if:

(a) as at the determination time, the total ^* transfer value of the ^* segregated exempt assets of the ^* head company of the ^* consolidated group exceeds the amount of that company ' s ^* exempt life insurance policy liabilities, wholly or partly because:

(i) those assets include assets out of which exempt life insurance policy liabilities attributable to the fused entities ' policy were to have been discharged; and

(ii) while both the fused entities are members of the group, the liability to pay the ^* annuity is taken not to exist for the head company core purposes set out in section 701-1 (Single entity rule), because one or more applications of that section treat the fused entities as one entity; and

(b) because of that excess, the head company transfers under subsection 320-235(1) or 320-250(2), from its segregated exempt assets, assets (the policy assets ) whose total transfer value equals the amount of the excess attributable to the matters described in subparagraphs (a)(i) and (ii).

However, this section does not apply if the policyholder ceases to be a ^* member of the consolidated group between the fusion time and the determination time.

Note:

Subsections 320-235(1) and 320-250(2) require a life insurance company to transfer assets from its segregated exempt assets if, at certain times, the total transfer value of the segregated exempt assets exceeds the amount of the company ' s exempt life insurance policy liabilities.

Policy assets ' transfer value not included in assessable income

713-555(2)
Paragraph 320-15(1)(f) does not apply to the transfer of the policy assets.

Note:

Paragraph 320-15(1)(f) includes in a life insurance company ' s assessable income the transfer values of assets transferred by the company from the company ' s segregated exempt assets under subsection 320-235(1) or 320-250(2).

Extra assessable income if policy is not a qualifying security

713-555(3)
If the fused entities ' policy is not a qualifying security (as defined in section 159GP of the Income Tax Assessment Act 1936 ), the assessable income of the ^* head company of the ^* consolidated group for the income year in which the company transfers the policy assets includes the amount worked out using the formula:

Total *transfer value of the policy assets

−

Reduced purchase price of the annuity

where:

reduced purchase price of the annuity
means the reduced purchase price of the ^* annuity as at the determination time worked out under subsection (3A) as if the determination time (rather than the fusion time) had been the first time at which both the fused entities were ^* members of the ^* consolidated group.

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History

S 713-555(3) amended by No 15 of 2007, s 3 and Sch 1 item 247, by substituting " subsection (3A) " for " Subdivision AA of Division 2 of Part III of the Income Tax Assessment Act 1936 " in the definition of " reduced purchase price of the annuity " , applicable to the 2007-2008 income year and later years.

713-555(3A)
For the purposes of subsection (3), work out the reduced purchase price of the *annuity as follows:

(a) first, work out the purchase price (within the meaning of section 27H of the Income Tax Assessment Act 1936 ) of the annuity;

(b) next, reduce that purchase price by the total of the amounts excluded from assessable income under paragraph 27H(1)(a) of that Act as deductible amounts in relation to the annuity.

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History

S 713-555(3A) inserted by No 15 of 2007, s 3 and Sch 1 item 248, applicable to the 2007-2008 income year and later years.

Assessable income or deduction if policy is a qualifying security

713-555(4)
If the fused entities ' policy is a qualifying security (as defined in section 159GP of the Income Tax Assessment Act 1936 ), section 159GS (Balancing adjustment on transfer of qualifying security) of that Act applies as if:

(a) the ^* head company of the ^* consolidated group:

(i) had been the holder (as defined in section 159GP of that Act) of the policy; and

(ii) had transferred the policy when it transferred the policy assets; and

(b) the transfer price had equalled the total ^* transfer value of the policy assets; and

(c) the determination time (rather than the fusion time) had been the first time at which both the fused entities were ^* members of the consolidated group.

Note:

If the policyholder becomes a subsidiary member of the consolidated group, section 701-5 (Entry history rule) treats the head company as if anything that had happened to the policyholder before it became a subsidiary member of the group had happened to the head company.

S 713-525 to s 713-585 substituted for s 713-525 and s 713-530 by No 41 of 2005.