Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 713 - Rules for particular kinds of entities  

Subdivision 713-L - Life insurance companies  

Life insurance companies' liabilities on joining consolidated group

SECTION 713-511   Treatment of certain liabilities for income year when life insurance company joins consolidated group  

713-511(1)    
This section affects how paragraph 320-15(1)(h) and section 320-85 apply if:

(a) a ^* life insurance company becomes a ^* subsidiary member of a ^* consolidated group at a time (the joining time ); and

(b) just before the joining time, the life insurance company had one or more liabilities under the ^* net risk components of life insurance policies.

Note:

Paragraph 320-15(1)(h) and section 320-85 both operate on the basis of a comparison of the value of the company ' s liabilities under the net risk components of life insurance policies at the end of the current year with the value of those liabilities at the end of the previous year, so that:

(a) that paragraph includes an amount in the company ' s assessable income for the current year if the value at the end of the current year is less than the value at the end of the previous income year; and

(b) that section allows a deduction for the current year if the value at the end of the current year is more than the value at the end of the previous income year.

713-511(2)    
The object of this section is to ensure that the ^* head company of the ^* consolidated group bears the income tax consequences relating to a change in ^* value of the liabilities only after the joining time.

Note:

The life insurance company bears the income tax consequences relating to a change in value of the liabilities before the joining time, because section 701-30 ensures that paragraph 320-15(1)(h) and section 320-85 apply in relation to a part of the income year before that time when the company was not a subsidiary member of a consolidated group as if that part were an income year.

713-511(3)    
Paragraph 320-15(1)(h) and section 320-85 apply for the head company core purposes set out in section 701-1 (Single entity rule) as if the ^* value of the liabilities at the end of the last income year ending before the joining time were the value of the liabilities (for the ^* life insurance company) just before the joining time.