Tax Laws Amendment (2009 Measures No. 2) Act 2009 (42 of 2009)

Schedule 1   Tax treatment of payments under financial claims scheme

Income Tax Assessment Act 1997

26   At the end of Division 322

Add:

Subdivision 322-B - Tax treatment of entitlements under financial claims scheme

Guide to Subdivision 322-B

322-20 What this Subdivision is about

This Act applies to a payment of an entitlement under Part VC (Financial claims scheme for policyholders with insolvent general insurers) of the Insurance Act 1973 as if the payment were made by the insurer under the insurance policy concerned.

Disregard a capital gain or loss from:

(a) the disposal to APRA under that Part of rights against the insurer under an insurance policy; or

(b) the payment of an entitlement under that Part.

Table of sections

Operative provisions

322-25 Payment of entitlement under financial claims scheme treated as payment from insurer

322-30 Disposal of rights against insurer to APRA and meeting of financial claims scheme entitlement have no CGT effects

Operative provisions

322-25 Payment of entitlement under financial claims scheme treated as payment from insurer

(1) This Act applies to you as if an amount paid to you, or applied for your benefit, to meet your entitlement under Part VC (Financial claims scheme for policyholders with insolvent general insurers) of the Insurance Act 1973 relating to a *general insurance policy issued by a *general insurance company had been paid to you by the company under the terms and conditions of the policy.

(2) To avoid doubt, subsection (1) does not affect the operation of Part 2-5 in Schedule 1 to the Taxation Administration Act 1953.

Note: Division 21 in Schedule 1 to the Taxation Administration Act 1953 contains special provisions about how Part 2-5 in that Schedule operates in relation to the meeting of entitlements under Part VC of the Insurance Act 1973.

322-30 Disposal of rights against insurer to APRA and meeting of financial claims scheme entitlement have no CGT effects

Disregard a *capital gain or *capital loss you make because:

(a) under section 62ZZL of the Insurance Act 1973, you *dispose of a *CGT asset consisting of your rights against a *general insurance company to *APRA; or

(b) your entitlement under Division 3 of Part VC of that Act is met.

Note 1: Section 62ZZL of the Insurance Act 1973 causes you to cease to be the owner, and APRA to become the owner, of rights against a general insurance company relating to a general insurance policy when your entitlement arises under Part VC of that Act in relation to the policy.

Note 2: Division 3 of Part VC of the Insurance Act 1973 entitles persons with valid claims based on general insurance policies issued by certain general insurance companies that have since become insolvent to be paid the amount of those claims by APRA.