Taxation Determination

TD 94/34

Income tax: capital gains: can a premium constitute "an amount of money or other consideration" paid to acquire rights, or an interest in any rights, under a policy of life assurance for the purpose of subsection 160ZZI(3) of the Income Tax Assessment Act 1936 ?

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FOI status:

may be releasedFOI number: I 1217284

This Determination, to the extent that it is capable of being a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953 , is a public ruling for the purposes of that Part. Taxation Ruling TR 92/1 explains when a Determination is a public ruling and how it is binding on the Commissioner. Unless otherwise stated, this Determination applies to years commencing both before and after its date of issue. However, this Determination does not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20).

1. No. A premium (or an instalment of a premium) paid under a policy of life assurance does not constitute, for the purposes of subsection 160ZZI(3), an "amount of money or other consideration" paid to acquire rights, or an interest in any rights, under such a policy.

2. Where a person did not pay an amount of money or other consideration to a previous owner to acquire the rights, or an interest in any of the rights, under a policy of life assurance, any premium (or an instalment of any premium) paid by that person to the life company under such a policy does not then constitute, for subsection 160ZZI(3) purposes , an "amount of money or other consideration" paid for the acquisition of those rights or interests. Accordingly, the effect of subsections 160ZZI(2) and 160ZZI(3) in this situation is that Part IIIA does not apply to a subsequent disposal of those rights or interest .

3. On the other hand, where a person did pay an amount of money or other consideration to a previous owner to acquire those rights or interest, the effect of subsections 160ZZI(2) and 160ZZI(3) here is that Part IIIA does apply to a subsequent disposal of those rights or interest. The amount paid to the previous owner and any premium (or an instalment of any premium) paid to the life company are both included in the cost base, indexed cost base or reduced cost base of the asset being the rights or interest under the policy.

Commissioner of Taxation
21/4/94

Previously issued as Draft TD 93/D288

References

ATO references:
NO CGT Cell CGTDET94

ISSN 1038 - 8982

Related Rulings/Determinations:

TD 94/31
TD 93/32
TD 94/33

Subject References:
acquisition
assignment
life assurance policy
premiums

Legislative References:
ITAA 160ZH(1)(a)
ITAA 160ZH(1)(c)
ITAA 160ZH(1)(d)
ITAA 160ZZI(2)
ITAA 160ZZI(3)

TD 94/34 history
  Date: Version: Change:
You are here 21 April 1994 Original ruling  
  29 November 2006 Original ruling + note Repeal provision note