Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-35 - INSURANCE BUSINESS  

Division 321 - General insurance companies and companies that self-insure in respect of workers ' compensation liabilities  

Subdivision 321-A - Provision for, and payment of, claims by general insurance companies  

SECTION 321-20  

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.

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