ATO Interpretative Decision
ATO ID 2002/198
Income Tax
Ordinary bundled endowment policies issued by a friendly societyFOI status: may be released
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Does a friendly society issue any life insurance policies which provide for participating benefits as defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
No, a friendly society does not issue any life insurance policies which provide for participating benefits as defined in subsection 995-1(1) of the ITAA 1997.
Facts
A friendly society issues ordinary bundled endowment policies.
Reasons for Decision
A friendly society issues a life insurance policy which provides a participating benefit if the definition of a participating benefit in subsection 995-1(1) of the ITAA is satisfied..
Subsection 995-1(1) of the ITAA 1997 defines participating benefit as having the same meaning as that given by section 15 of the Life Insurance Act 1995 (the Life Insurance Act).
Policies issued by friendly societies are not participating policies. Regulation 2.01A of the Life Insurance Regulations 1995 (the Regulations) modifies the application of the Life Insurance Act to friendly societies. Item 1 of Schedule 5 of the Regulations omits section 15 of the Life Insurance Act for the purposes of applying that Act to friendly societies. Therefore, policies issued by friendly societies do not provide participating benefits as defined in subsection 995-1(1) of the ITAA 1997.
Date of decision: 27 August 2001Year of income: Year ended 30 June 2001 and subsequent income years
Legislative References:
Income Tax Assessment Act 1997
Subsection 995-1(1)
Section 15 Life Insurance Regulations 1995
Regulation 2.01A Related ATO Interpretative Decisions
ATO ID 2002/197
ATO ID 2002/199
ATO ID 2002/200
ATO ID 2002/201
Keywords
Life assurance
Endowment insurance
ISSN: 1445-2782