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

85   Insertion of new sections

Before section 116HB of the Principal Act the following sections are inserted:

Deductions to be allowable for expenditure incurred in obtaining superannuation premiums

"116HAB. (1) Subject to this section, the expenses mentioned in subsection (2) that are incurred by a registered organization in the year of income in connection with the obtaining of superannuation premiums are allowable deductions.

"(2) The expenses to which subsection (1) applies are:

(a) salaries, wages, bonuses, commissions, allowances, or similar benefits, in respect of the sale, renewal or continuation of superannuation policies; and

(b) expenditure in recruiting or training people in the selling of superannuation policies; and

(c) salaries, wages, allowances or similar benefits paid or payable to employees of the organization to the extent to which the benefits relate to the provision of administrative, technical or other assistance or support to people who sell superannuation policies; and

(d) expenditure in developing, or engaging in research in connection with, superannuation policies; and

(e) any other losses or outgoings to the extent to which they are incurred in preparing, selling or issuing superannuation policies or collecting superannuation premiums; and

(f) expenses in the general management of the organization's business to the extent to which the expenses are incurred in gaining or producing superannuation premiums.

"(3) If:

(a) a provision of this Act (other than this section or section 51, 116H or 116HAC) allows a deduction from a taxpayer's assessable income in respect of a loss, outgoing or expenditure; and

(b) the provision extends to a taxpayer that is a registered organization;

the provision has effect in determining the deductions allowable to a registered organization as if any reference in the provision to assessable income included a reference to superannuation premiums.

"(4) Expenses incurred by a registered organization (other than expenses in respect of which a deduction is allowable because of subsection (3)) that are of a capital nature are not allowable deductions under this section.

"(5) If, assuming that:

(a) the Taxation Laws Amendment Act 1994 had not been enacted; and

(b) this Act provided that a registered organization's assessable income included the superannuation premiums received by the organization;

a deduction would not have been allowed to a registered organization in respect of a loss, outgoing or expenditure or a part of a loss, outgoing or expenditure, then, a deduction is not allowable to the organization in respect of the loss, outgoing or expenditure or the part of the loss, outgoing or expenditure, as the case may be, under this section or under another provision of this Act as it has effect because of this section.

"(6) A reference in this section to a deduction in respect of a loss, outgoing or expenditure includes a reference to a deduction based on, or calculated by reference to, all or a portion of the loss, outgoing or expenditure.

"(7) In this section:

'superannuation premiums' do not include premiums that are exempt from tax under section 23AH.

"(8) This section applies to expenses incurred, or to deductions in respect of a loss, outgoing or expenditure incurred, on or after 1 January 1994.

Deductions to be allowable for expenditure incurred in obtaining the investment component of certain premiums

"116HAC. (1) In this section:

'authorised actuary', in relation to a registered organization, means a Fellow or an Accredited Member of the Institute of Actuaries of Australia;

'relevant life assurance premiums' means premiums received in respect of life assurance policies other than:

(a) superannuation premiums; or

(b) premiums received in respect of eligible policies; or

(c) specified roll-over amounts; or

(d) premiums exempt from tax under section 23AH;

'relevant life assurance policy' means a life assurance policy in respect of which premiums received are relevant life assurance premiums.

"(2) Subject to this section, the expenses mentioned in subsection (3) incurred by a registered organization in the year of income in connection with the obtaining of relevant life assurance premiums, to the extent to which the expenses relate to the investment component of those premiums, are allowable deductions.

"(3) The expenses to which subsection (2) applies are:

(a) salaries, wages, bonuses, commissions, allowances, or similar benefits, in respect of the sale, renewal or continuation of relevant life assurance policies; and

(b) expenditure in recruiting or training people in the selling of relevant life assurance policies; and

(c) salaries, wages, allowances or similar benefits paid or payable to employees of the organization to the extent to which the benefits relate to the provision of administrative, technical or other assistance or support to people who sell relevant life assurance policies; and

(d) expenditure in developing, or engaging in research in connection with, relevant life assurance policies; and

(e) any other losses or outgoings to the extent to which they are incurred in preparing, selling or issuing relevant life assurance policies or collecting relevant life assurance premiums; and

(f) expenses in the general management of the organization's business to the extent to which the expenses are incurred in gaining or producing relevant life assurance premiums.

"(4) If:

(a) a provision of this Act (other than this section or section 51, 116H or 116HAB) allows a deduction from a taxpayer's assessable income in respect of a loss, outgoing or expenditure; and

(b) the provision extends to a taxpayer that is a registered organization;

the provision has effect in determining the deductions allowable to a registered organization as if any reference in the provision to assessable income included a reference to the investment component of relevant life assurance premiums.

"(5) Expenses incurred by a registered organization (other than expenses in respect of which a deduction is allowable because of subsection (4)) that are of a capital nature are not allowable deductions under this section.

"(6) If, assuming that:

(a) the Taxation Laws Amendment Act 1994 had not been enacted; and

(b) this Act provided that a registered organization's assessable income included the investment component of relevant life assurance premiums received by the organization;

a deduction would not have been allowed to a registered organization in respect of a loss, outgoing or expenditure or a part of a loss, outgoing or expenditure, then, a deduction is not allowable to the organization in respect of the loss, outgoing or expenditure or the part of the loss, outgoing or expenditure, as the case may be, under this section or under another provision of this Act as it has effect because of this section.

"(7) This section does not apply to premiums derived by a registered organization in a year of income unless the organization obtains a certificate by an authorised actuary, in the approved form, with respect to the operation of this section, before the date of lodgment of the return of income of the organization of the year of income or within such further time as the Commissioner allows.

"(8) A reference in this section to a deduction in respect of a loss, outgoing or expenditure includes a reference to a deduction based on, or calculated by reference to, all or a portion of the loss, outgoing or expenditure.

"(9) This section applies to expenses incurred, or to deductions in respect of a loss, outgoing or expenditure incurred, on or after 1 July 1994.

Deductions not allowable for benefits or reinsurance premiums

"116HAD. (1) Despite any other provision of this Act, a deduction is not allowable to a registered organization in respect of:

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

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

(c) a premium paid or payable by the organization 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 insurance policy in settlement of a dispute as to the liability of the organization under the policy.

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

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

(b) 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

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

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

(e) that is a refund, or is in the nature of a refund, of a premium that is not included in the organization's assessable income.

"(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 registered organization that issued the relevant life assurance policy are included in the organization's assessable income is not a benefit paid or payable under a life assurance policy for the purposes of subsection (1).

"(4) If a registered organization makes a late payment in respect of an amount that the organization is liable to pay under, or in relation to, a life assurance policy, any interest paid or payable by the organization because of the late payment is not a benefit paid or payable under the policy for the purposes of subsection (1).

"(5) In this section:

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

"(6) 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.".