Tax Office focus on life insurance policies issued from tax havens

23/11/2009

Media release 2009/62

The Tax Office today issued a taxpayer alert warning taxpayers to be cautious about investing in life insurance policies issued from insurance companies based in tax havens, such as Vanuatu.

Tax Commissioner Michael D'Ascenzo said he is concerned these arrangements may attempt to exploit the lack of transparency in tax havens.

"We know these arrangements are in the market, and we have seen a number being promoted from Vanuatu," Mr D'Ascenzo said.

Under these arrangements, promoters market certain life insurance policies as qualifying for concessional tax treatment on proceeds from the policy or tax deductions on fees paid under the policy.

However these policies may not qualify for such benefits and self managed super funds may also breach the superannuation regulations for complying funds.

"People considering these arrangements should be aware their tax affairs will be closely examined by the Tax Office, in addition to potential action by other government agencies as part of Project Wickenby."

People who are unsure about their situation should seek independent advice or contact the Tax Office for a private ruling on their individual circumstances.

Those who have participated in these arrangements and contact the Tax Office before they are contacted for an audit will be entitled to a reduction in any penalties that may apply.

More information

Taxpayer Alert 2009/17 is available from the Tax Office website www.ato.gov.au/atp

Tax agents with information about people or companies who may be promoting arrangements covered by this alert should call the Tax Practitioner Integrity Service on 1800 639 745.

Taxpayers who wish to make a voluntary disclosure or those who have information about promotion of these arrangements should call the Tax Office on 1800 060 062 or report information online at www.ato.gov.au/reportevasion

Taxpayer alerts are intended as an 'early warning' to taxpayers and their advisers of significant tax planning issues or arrangements that the Tax Office has under risk assessment or about which it has concerns.