Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-30 - SUPERANNUATION  

Division 295 - Taxation of superannuation entities  

Subdivision 295-G - Deductions  

Death or disability benefits

SECTION 295-465   Complying funds - deductions for insurance premiums  

Deductions for insurance premiums

295-465(1)    

A *complying superannuation fund can deduct the proportions specified in this table of premiums it pays for insurance policies that are (wholly or partly) for current or contingent liabilities of the fund to provide benefits referred to in section 295-460 for its members. It can deduct the amounts for the income year in which the premiums are paid.

Deductions of * complying superannuation funds
Item	The fund can deduct this amount:
1	30 % of the premium for a * whole of life policy if all individuals whose lives are insured are members of the fund
2	10 % of the premium for an * endowment policy if all individuals whose lives are insured are members of the fund
3	30 % of the part of an insurance policy premium (for a policy that is not a * whole of life policy or an * endowment policy) that is specified in the policy as being for a distinct part of the policy, if that part would have been a whole of life policy had it been a separate policy
4	10 % of the part of an insurance policy premium (for a policy that is not a * whole of life policy or an * endowment policy) that is specified in the policy as being for a distinct part of the policy, if that part would have been an endowment policy had it been a separate policy
5	The part of a premium that is specified in the policy as being wholly for the liability to provide certain benefits, if those benefits are benefits referred to in section 295-460
6	So much of other insurance policy premiums as are attributable to the liability to provide benefits referred to in section 295-460

Note:

If the fund receives a rebate or refund of an insurance premium, the amount may be included in its assessable income: see table item 4 in section 295-320 .

295-465(1A)    

If item 5 of the table applies to part, but not all, of an insurance policy premium, item 6 of the table applies to the rest of the premium as if item 5 did not apply to the premium.

295-465(1B)    

For the purposes of item 6 of the table, the regulations may provide that a specified proportion of a specified insurance policy premium may be treated as being attributable to the *complying superannuation fund ' s liability to provide benefits referred to in section 295-460 .

Note:

The fund may deduct a proportion other than that specified in the regulations for the premium, but must obtain an actuary ' s certificate in accordance with subsection (3) in order to do so. The same applies if the insurance policy premium is not specified in the regulations.

Deductions for self-insurance

295-465(2)    
A *complying superannuation fund can also deduct the amount it could reasonably be expected to pay in an *arm's length transaction to obtain an insurance policy to cover it for that part of its current or contingent liabilities to provide benefits referred to in section 295-460 for which it does not have insurance coverage. It can deduct the amount for the income year when it has the liability.

295-465(2A)    

For the purposes of subsection (2), the regulations may provide that a specified proportion of an amount mentioned in subsection (2B) may be treated as being the amount the fund could reasonably be expected to pay in an *arm ' s length transaction to obtain an insurance policy to cover it for its current or contingent liabilities to provide benefits referred to in section 295-460 .

Example:

If:

(a) an actuary certifies the amount a fund could reasonably be expected to pay in an arm ' s length transaction to obtain an insurance policy; and

(b) the insurance policy covers liabilities of the fund to provide a class of total and permanent disability benefits broader than that covered by section 295-460 ; and

(c) the insurance policy is specified in the regulations; and

(d) the fund does not have insurance coverage for the liabilities;

the fund may deduct, under subsection (2), so much of that certified amount as is specified in the regulations.

295-465(2B)    

The amount is the amount a *complying superannuation fund could reasonably be expected to pay in an *arm ' s length transaction to obtain an insurance policy specified in the regulations.

Actuary's certificate

295-465(3)    
The trustee must obtain an *actuary's certificate before the date for lodgment of the fund's *income tax return for the income year in order to deduct an amount referred to in item 6 of the table or in subsection (2).

295-465(3A)    

Subsection (3) does not apply to an amount referred to in item 6 of the table in relation to an insurance policy premium, if the trustee deducts, under that item, only the proportion (if any) of the premium specified in the regulations made for the purposes of subsection (1B).

Choice not to deduct amounts under this section

295-465(4)    
The trustee may choose not to deduct amounts under this section for an income year and to deduct instead (under section 295-470 ) amounts based on the fund's future liability to pay the benefits.

295-465(5)    
The choice applies also to future income years unless the Commissioner decides that it should not.