Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Act 2024 (52 of 2024)

Schedule 6   Income tax amendments for updates to accounting standards for general insurance contracts

Part 1   Main amendments

Income Tax Assessment Act 1997

5   Section 321-20

Repeal the section, substitute:

321-20 How the value of adjusted liability for incurred claims is worked out

Work out the value, at the end of an income year, of a *general insurance company's adjusted *liability for incurred claims under *general insurance policies in this way:

Method statement

Step 1. Use the *applicable insurance contracts accounting standard to measure, at the end of the income year, the company's *liability for incurred claims under *general insurance policies, but when doing so disregard any claims handling costs that are neither attached to, nor directly attributable to, a particular claim.

Step 2. Using that standard, reduce the result from step 1 by so much of that result as the company expects at the end of the income year to recover under a reinsurance contract:

(a) within the meaning of that standard; but

(b) that is not one to which subsection 148(1) of the Income Tax Assessment Act 1936 (about reinsurance with non-residents) applies.