Taxation Laws Amendment (Structured Settlements and Structured Orders) Act 2002 (139 of 2002)

Schedule 1  

Part 1   Main amendments

Life Insurance Act 1995

2   After Division 2 of Part 10

Insert:

Division 2A - Restriction on assignment or commutation of payments under structured settlements and structured orders

203A Definitions

In this Division:

structured order has the same meaning as it has in Division 54 of the Income Tax Assessment Act 1997.

structured settlement has the same meaning as it has in Division 54 of the Income Tax Assessment Act 1997.

tax-exempt annuity has the meaning given by paragraph 203B(a).

tax-exempt lump sum has the meaning given by paragraph 203B(b).

203B Application of Division to tax-exempt annuities and lump sums

This Division applies, at a particular time, to:

(a) an annuity (a tax-exempt annuity ) payable (now or in the future) by:

(i) a company that is registered under this Act; or

(ii) a body that carries on State insurance, within the meaning of paragraph 51(xiv) of the Constitution;

if, at that time, the requirements of sections 54-20 to 54-40 of the Income Tax Assessment Act 1997 are satisfied in relation to the annuity; and

(b) a lump sum (a tax-exempt lump sum ) payable (now or in the future) by:

(i) a company that is registered under this Act; or

(ii) a body that carries on State insurance, within the meaning of paragraph 51(xiv) of the Constitution;

if, at that time, the requirements of sections 54-45 to 54-60 of the Income Tax Assessment Act 1997 are satisfied in relation to the lump sum.

Note 1: The application of this Division to bodies that carry on State insurance is subject to section 5.

Note 2: Division 54 of the Income Tax Assessment Act 1997 provides a tax exemption for certain payments under structured settlements and structured orders.

203C Assignments or commutations of tax-exempt annuities are generally not effective

(1) A purported assignment or commutation of an annuity that is, at the time of the purported assignment or commutation, a tax-exempt annuity is not effective at law (subject to subsection (2)).

(2) However, the annuity can be commuted as mentioned in section 54-35 of the Income Tax Assessment Act 1997.

203D Assignments or commutations of tax-exempt lump sums are not effective

(1) A purported assignment of the right to receive a lump sum that is, at the time of the purported assignment, a tax-exempt lump sum is not effective at law.

(2) A purported commutation, or other early cashing-out, of the right to receive a lump sum that is, at the time of the purported commutation or cashing-out, a tax-exempt lump sum is not effective at law.

230E Relationship with Division 2

Division 2 has effect subject to this Division.