Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-15 - NON-ASSESSABLE INCOME  

Division 54 - Exemption for certain payments made under structured settlements and structured orders  

Subdivision 54-B - Tax exemption for personal injury annuities  

Operative provisions

SECTION 54-35   Payments during the guarantee period on the death of the injured person  

54-35(1)    
This section applies if the *annuity instrument provides for payments to be made to the *injured person during any part of the period ending 10 years after the *date of the settlement or order (whether the *annuity is expressed to be for the life of the person or for a period of years).

54-35(2)    
The *annuity instrument may specify a period (the guarantee period ) of up to 10 years after the *date of the settlement or order, during which, if the *injured person dies, the payments (the remaining payments ) for the remainder of the guarantee period that would have been paid to the injured person are to be paid instead to:

(a) the injured person ' s estate; or

(b) a reversionary beneficiary.

Note:

For tax exemptions in this situation, see sections 54-65 and 54-70.

54-35(3)    
If the *annuity instrument provides for the remaining payments to be made to a reversionary beneficiary, the instrument must:

(a) name the beneficiary; and

(b) allow the beneficiary to choose either:

(i) to be paid the amounts of the remaining payments when the injured person would have received them; or

(ii) to commute those payments into a lump sum worked out under subsection (5).

54-35(4)    
The *injured person ' s estate may only be paid the lump sum worked out under subsection (5) (and not the periodic payments).

54-35(5)    
The amount of the lump sum under subparagraph (3)(b)(ii) or subsection (4) is the *policy termination value of the *life insurance policy that is the *annuity instrument, as calculated by an *actuary as at the date of the injured person ' s death. In making this calculation, the following are to be disregarded:

(a) any payments of the annuity due to be made after the end of the guarantee period;

(b) any *structured settlement lump sums that are also provided for by that policy.

54-35(6)    
In this section:

pay to a person
includes pay to the trustee of a trust of which the person is the beneficiary.

pay to the injured person ' s estate
includes pay to the trustee of a trust established by the *injured person ' s will.