Tax Laws Amendment (2004 Measures No. 2) Act 2004 (83 of 2004)

Schedule 1   Life insurance companies

Part 1   Amendments commencing on 30 June 2000

Income Tax Assessment Act 1997

57   After section 320-245

Insert:

320-246 Exempt life insurance policy

(1) An exempt life insurance policy is a *life insurance policy (other than an *RSA):

(a) that is held by the trustee of a *complying superannuation fund and provides solely for the discharge of the current pension liabilities (within the meaning of Part IX of the Income Tax Assessment Act 1936) of the fund; or

(b) that is held by the trustee of a *pooled superannuation trust, where:

(i) the policy provides solely for the discharge of the current pension liabilities (within the meaning of Part IX of the Income Tax Assessment Act 1936) of complying superannuation funds; and

(ii) the funds are unit holders of the trust; or

(c) that is held by another *life insurance company and is a *segregated exempt asset of that other company; or

(d) that is held by the trustee of a *constitutionally protected fund; or

(e) that provides for an *immediate annuity that:

(i) was purchased on or before 9 December 1987 and was not purchased wholly or partly with a rolled-over amount; or

(ii) satisfies the conditions in subsections (3), (4) and (5) and was purchased on or before 9 December 1987 wholly or partly with a rolled-over amount; or

(iii) satisfies the conditions in subsections (3), (4) and (5) and was purchased after 9 December 1987.

Note: A part of a life insurance policy may be taken to be an exempt life insurance policy under section 320-247.

(2) In subsection (1), a rolled-over amount has the same meaning as it has under section 27A of the Income Tax Assessment Act 1936.

(3) An *immediate annuity satisfies the conditions in this subsection if it is payable until the later of:

(a) the death of a person (or the death of the last to die of 2 or more persons); or

(b) the end of a fixed term.

(4) An *immediate annuity satisfies the conditions in this subsection if the contract under which it is payable does not permit:

(a) the total amount payable for its commutation to exceed its reduced purchase price (within the meaning of section 27A of the Income Tax Assessment Act 1936); and

(b) any payment of its residual capital value (within the meaning of that section) to exceed its purchase price (within the meaning of that section).

(5) An *immediate annuity satisfies the conditions in this subsection if there is no unreasonable deferral of the payments of the annuity, having regard to:

(a) to the extent to which the payments depend on the returns of the investment of the assets of the *life insurance company paying the annuity - when the payments are made and when those returns are derived; and

(b) to the extent to which the payments do not depend on those returns - the relative sizes of the payments from year to year; and

(c) any other relevant factors.

320-247 Policy split into an exempt life insurance policy and another life insurance policy

When is a part of a policy taken to be an exempt life insurance policy?

(1) A part of a *life insurance policy (the original policy ) is taken to be an *exempt life insurance policy for the purposes of this Act if:

(a) the part provides solely for the discharge of the current pension liabilities (within the meaning of Part IX of the Income Tax Assessment Act 1936) of a *complying superannuation fund; and

(b) the trustee of the fund holds the original policy.

(2) A part of a *life insurance policy (the original policy ) is taken to be an *exempt life insurance policy for the purposes of this Act if:

(a) the part provides solely for the discharge of liabilities that are attributable to the current pension liabilities (within the meaning of Part IX of the Income Tax Assessment Act 1936) of *complying superannuation funds; and

(b) the trustee of a *pooled superannuation trust holds the original policy; and

(c) the funds are unit holders of the trust.

What happens to the rest of the policy?

(3) If a part of a policy (the original policy ) is taken to be an *exempt life insurance policy under subsection (1) or (2), the rest of the original policy is taken to be another *life insurance policy for the purposes of this Act.