Exemption for an interest in a foreign life insurance company

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This exemption allows you to invest in a foreign life insurance company without attracting FIF taxation. [section 506]

A foreign company is considered to be engaged in life insurance business (as defined in the Life Insurance Act 1995) only if:

• the company is authorised in its country of residence to carry on life insurance business, and
• the balance sheet of the company shows that at least 50% of the gross value of the company's assets were for use in carrying on life insurance business. [section 507 and definition of 'life insurance business' in section 470]

The look-through rule

If the foreign life insurance company has an interest in a subsidiary company, the foreign life insurance company can look through to a 50% owned subsidiary. The look-through rule allows the subsidiary's assets to be looked at to decide whether the foreign life insurance company passes the 50% assets test. [subsections 507(3) to (11)]