Meaning of a foreign life assurance policy

Warning:

This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

End of attention

Your FLP for an income year is a life assurance policy issued by an entity that was not a resident at any time in that income year.

A life assurance policy is one that provides for the payment of benefits:

• upon death, other than death by accident or specified sickness only, or
• on the happening of a specified event which relates to the ending or continuing of a human life.

A life assurance policy also includes an instrument that grants an annuity for a term dependent upon a human life. [subsection 482(2)]

The FIF measures do not apply to the following four categories of life policies:

• an Australian policy, provided that the entity which issued the policy was authorised under the Life Insurance Act 1995 to carry on life insurance business in Australia when it issued the policy
• policies that provide for payment of benefits on death, or death or permanent disability only
• policies issued before 1 July 1992 that cannot, after that date, be cancelled, surrendered or redeemed and for which the terms have not, after that date, been altered in any material way, or
• a contract of reinsurance between a resident insurer and a non-resident reinsurer for life assurance policies which provide only life cover. [paragraphs 482(2)(e) and (f)]

New legislation exempts complying superannuation funds from the FIF rules with application from 1 July 2003.

For more information, phone the Business Tax Reform Infoline on 13 28 66.

Interest in an FLP subject to taxation

Your assessable income for an income year includes FIF income if:

• you had an interest in an FLP at any time during an FLP's notional accounting period that ends in your income year, and
• you were a resident at any time in that income year. [subsection 485(4)]

The measures do not apply to an interest in an FLP if you disposed of that interest before 30 June 1993. [subsection 485(5)]