INCOME TAX ASSESSMENT ACT 1997 (ARCHIVE)

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-35 - INSURANCE BUSINESS  

Division 320 - Life insurance companies  

Subdivision 320-B - What is included in a life insurance company's assessable income  

SECTION 320-40 (ARCHIVE)   One-third of certain management fees received under contracts made before 1 July 2000 are non-assessable non-exempt income  

320-40(1)    
One-third of a *life insurance company's *specified management fees for the income year in respect of *life insurance policies constituted by contracts made with the company before 1 July 2000 are not assessable income and are not *exempt income.

Note:

The effect of this section is modified when the life insurance business of a life insurance company is transferred to another life insurance company: see section 320-345 .

320-40(2)    
This section does not apply to amounts that become *specified management fees after 30 June 2005.

320-40(3)    
There are no *specified management fees in respect of *life insurance policies that, at 30 June 2000, were:

(a) policies under which amounts are to be paid only on the death or disability of a person; or

(b) policies to which both of the following apply:

(i) the policies provide for *participating benefits or *discretionary benefits;

(ii) the policies do not become policies under which the company's liabilities are to be discharged out of its *virtual PST assets or its *segregated exempt assets.

320-40(4)    
The specified management fees for the income year in respect of *life insurance policies to which subsection (3) does not apply are so much of the sum of the amounts applicable in respect of the policies under subsections (5), (6) and (7) (the applicable amounts ) as does not exceed any fees or charges made by the *life insurance company that the company was entitled to make under the terms of the policies as applying immediately before 1 July 2000.

320-40(5)    
The applicable amount for *virtual PST life insurance policies where the company's liabilities under the policies are to be discharged out of its *virtual PST assets is:

(a) the sum of the amounts transferred from the *virtual PST in the income year under subsection 320-180(1) or 320-195(3) ;

less:

(b) so much of the sum of:

(i) any amounts transferred to the virtual PST in the income years under subsection 320-185(3) or 320-185(1) ; and

(ii) any of the amounts mentioned in paragraph (a) that are related to the company's liability to pay amounts on the death or disability of a person; and

(iii) any of the amounts mentioned in paragraph (a) that are related to expenses incurred by the company in respect of policies that provide for *participating benefits or *discretionary benefits; and

(iv) any of the amounts mentioned in paragraph (a) that are not covered by subparagraph (ii) or (iii) and are covered by subsection (5A);

as does not exceed the sum of the amounts mentioned in paragraph (a).

320-40(5A)    
This subsection covers amounts that:

(a) are related to expenses incurred by the company directly in respect of *virtual PST assets in relation to a period during which the assets were virtual PST assets; and

(b) were transferred from the *virtual PST in the income year (as mentioned in paragraph (5)(a)) because the expenses were not paid from the virtual PST as required by subsection 320-195(4) .

Note:

For example, the amounts were transferred out of the virtual PST under subsection 320-195(3) because fees or charges were imposed to recover those expenses (as the expenses would have been paid from assets other than virtual PST assets).

320-40(6)    
The applicable amount for *exempt life insurance policies where the company's liabilities under the policies are to be discharged out of its *segregated exempt assets is:

(a) the sum of the amounts transferred from the segregated exempt assets in the income year under subsection 320-235(1) or 320-250(2) ;

less:

(b) so much of the sum of:

(i) any amounts transferred to the segregated exempt assets in the income year under subsection 320-235(3) or 320-240(1) ; and

(ii) any of the amounts mentioned in paragraph (a) that are related to expenses incurred by the company in respect of policies that provide for *participating benefits or *discretionary benefits; and

(iii) any of the amounts mentioned in paragraph (a) that are not covered by subparagraph (ii) and are covered by subsection (6A);

as does not exceed the sum of the amounts mentioned in paragraph (a).

320-40(6A)    
This subsection covers amounts that:

(a) are related to expenses incurred by the company directly in respect of *segregated exempt assets in relation to a period during which the assets were segregated exempt assets; and

(b) were transferred from the segregated exempt assets in the income year (as mentioned in paragraph (6)(a)) because the expenses were not paid from the segregated exempt assets as required by subsection 320-250(3) .

Note:

For example, the amounts were transferred out of the segregated exempt assets under subsection 320-250(2) because fees or charges were imposed to recover those expenses (as the expenses would have been paid from assets other than segregated exempt assets).

320-40(7)    
The applicable amount for other policies is:

(a) the sum of:

(i) the *life insurance premiums received in respect of the policies in the income year; and

(ii) any amounts that the company includes in its assessable income in respect of the policies under paragraph 320-15(1)(k) for the income year;

less:

(b) so much of the sum of:

(i) the amounts that the company can deduct under section 320-75 in respect of the policies in the income year; and

(ii) the *risk components of claims paid under the policies in the income year;

as does not exceed the sum of the amounts mentioned in paragraph (a).

320-40(8)    
An amount that is not assessable income and is not *exempt income under this section is taken to be assessable income of the *life insurance company for the purposes of section 8-1 .