Taxation Laws Amendment Act (No. 1) 1999 (16 of 1999)

Schedule 9   Average calculated liabilities of life assurance companies

Income Tax Assessment Act 1936

7   After section 114

Insert:

114A Average calculated liabilities for category of policies

(1) The average calculated liabilities of a life assurance company for a category of policies for a year of income is worked out under this section.

(2) First, divide the year of income into periods as follows:

(a) the first period starts at the start of the year of income;

(b) each later period starts immediately after the last day of the previous period;

(c) each period (except the last) ends immediately before the first day on which a significant event occurs in relation to the insurance fund in which policies of the category are included;

(d) the last period ends at the end of the year of income.

(3) Second, the average calculated liabilities of the company for the category of policies for each period is the amount worked out by using the formula:

| Calculated liabilities Calculated liabilities | | (start of period) x (end of period) | Days in period ----------------------------------------------------- x ---------------------- 2 Days in year of income

where:

calculated liabilities (end of period) means the calculated liabilities of the company for the category of policies at the end of the period.

calculated liabilities (start of period) means the calculated liabilities of the company for the category of policies:

(a) if the period is the first period - at the start of the period; or

(b) otherwise - on the day after the occurrence of the significant event that caused the immediately preceding period to end.

days in period means the number of days in the period.

days in year of income means the number of days in the year of income.

(4) Third, the average calculated liabilities of the company for the category of policies for the year of income is the sum of the amounts of the average calculated liabilities of the company for the category of policies for all the periods into which the year of income is divided.

114B Total average calculated liabilities

The total average calculated liabilities of a life assurance company for a year of income is the sum of the average calculated liabilities of the company for each category of policies for the year of income.