Taxation Laws Amendment Act 1994 (56 of 1994)

Part 3   AMENDMENT OF THE INCOME TAX ASSESSMENT ACT 1936

Division 10   Life assurance companies and registered organizations

77   Insertion of new section

After section 112A of the Principal Act the following section is inserted:

Deductions not allowable for benefits or reinsurance premiums

"112BA. (1) Despite any other provision of this Act, a deduction is not allowable to a life assurance company in respect of:

(a) a benefit paid or payable under a life assurance policy; or

(b) the inclusion of an amount in the company's reserves for the purpose of meeting any future liability (including a contingent liability) of the company to pay benefits to which paragraph (a) would apply; or

(c) a premium paid or payable by the company in respect of the reinsurance of the whole or any part of a life assurance policy; or

(d) an amount paid or payable to, or to an associate of, the holder of a life assurance policy in settlement of a dispute as to the liability of the company under the policy.

"(2) A reference in subsection (1) to a benefit paid or payable under a life assurance policy:

(a) includes a reference to an amount paid or payable:

(i) in respect of a claim under the policy; or

(ii) as consideration for, in connection with, or as a consequence of, the surrender, cancellation, forfeiture, termination or disposal of the policy or any rights under the policy; or

(iii) in respect of a bonus under the policy; or

(iv) in respect of an annuity under the policy; or

(v) that is a refund, or is in the nature of a refund, of a premium that, under section 111, is not included in the company's assessable income; but

(b) does not include any interest payable under section 57 of the Insurance

Contracts Act 1984.

"(3) To remove any doubt, it is declared that a supplementary benefit (known as a rider benefit) that is paid or payable in respect of a non-life assurance risk (including an accident and disability risk, a sickness risk and a trauma risk) and in respect of which the premiums received by the life assurance company that issued the relevant life assurance policy are included in the company's assessable income is not a benefit paid or payable under a life assurance policy for the purposes of subsection (1).

"(4) In this section:

'associate' has the same meaning as in subsection 26AAB(14).

"(5) This section applies to assessments in respect of income of the year of income in which 1 July 1988 occurred and to assessments in respect of income of all later years of income.".