Taxation Laws Amendment Act (No. 1) 1995 (120 of 1995)

Schedule 1   VARIOUS AMENDMENTS OF THE INCOME TAX ASSESSMENT ACT 1936

Part 11   PASSIVE INCOME OF CFCs

87   Subsection 446(4)

Omit the subsection, substitute:

"(4) In spite of anything in subsection (1), the passive income of a general insurance company of a statutory accounting period is calculated using the formula:

Adjusted passive income * (Tainted outstanding claims / Outstanding claims

where:

Adjusted passive income means the amount that, apart from this subsection, would be the passive income of the company of the statutory accounting period;

Tainted outstanding claims means so much of the outstanding claims of the company at the end of the statutory accounting period as is referable to general insurance policies that give rise to tainted services income of the company of any statutory accounting period;

Outstanding claims means the amount that the company would, at the end of the statutory accounting period, based on proper and reasonable estimates, need to set aside and invest in order to meet liabilities of the company that have arisen or will arise:

(a) under general insurance policies; and

(b) in respect of events that occurred during or before the period.".