ATO Interpretative Decision
ATO ID 2002/839
Income Tax
Life Insurance Contracts: annual management feeFOI status: may be released
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This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is a life insurance company entitled to an exemption under section 320-40 of the Income Tax Assessment Act 1997 (ITAA 1997) if, after 30 June 2000, it increases the annual management fee that it imposes under its investment linked superannuation policy, to an amount that does not exceed the maximum annual management fee that it was entitled to impose, under the terms and conditions of the life insurance policy, entered into before 1 July 2000?
Decision
Yes. A life insurance company is entitled to an exemption under section 320-40 of the ITAA 1997 if, after 30 June 2000, it increases the annual management fee it imposes under its investment linked superannuation policy, to an amount that does not exceed the maximum annual management fee that it was entitled to impose, under the terms and conditions of the policy, entered into before 1 July 2000.
Facts
The terms of an investment linked superannuation policy before 1 July 2000 entitled a life insurance company to impose a maximum annual management fee of 2 per cent of assets under management.
Before 1 July 2000 the life insurance company imposed an annual management fee of 1.5 per cent under the terms of its investment linked superannuation policy. After 30 June 2000 the Life Insurance Company imposes an annual management fee of 1.6 per cent under the terms of its investment linked superannuation policy.
Reasons for Decision
The terms of an investment linked superannuation policy before 1 July 2000 entitled a life insurance company to impose a maximum annual management fee of 2 per cent of assets under management.
Before 1 July 2000 the life insurance company imposed an annual management fee of 1.5 per cent under the terms of its investment linked superannuation policy. After 30 June 2000 the life insurance company imposes an annual management fee of 1.6 per cent under the terms of its investment linked superannuation policy.
Therefore, the life insurance company meets the requirement of subsection 320-40(4) of the ITAA 1997 and is entitled to an exemption for specified management fees under section 320-40 of the ITAA 1997 for its investment linked superannuation policy.
Date of decision: 10 July 2002Year of income: Year ended 30 June 2002
Legislative References:
Income Tax Assessment Act 1997
section 320-40
subsection 320-40(1)
subsection 320-40(4)
ATO ID 2002/837
ATO ID 2002/838
ATO ID 2002/840
ATO ID 2002/841
ATO ID 2002/842
Keywords
Life assurance expenses
Life assurance
Life assurance industry
Management fees expenses
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 10 July 2002 | Original statement |
| 18 February 2011 | Archived |