ATO Interpretative Decision
ATO ID 2002/841 (Withdrawn)
Income Tax
Life Insurance Contracts: maximum annual management feeFOI status: may be released
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This ATO ID is withdrawn form the database because it contains a view in respect of provisions of the Income Tax Assessment Act 1997 that doesn't apply after the 2006- 2007 income year. Despite its withdrawal from the database, this ATO ID continues to be a precedential view in respect of decisions for income years up to, and including, the 2006-2007 income year.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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) for any increase in the annual management fee it imposes after 30 June 2000, which exceeds the maximum annual management fee it was entitled to impose under the terms of its investment linked superannuation policy before 1 July 2000?
Decision
No. A life insurance company is not entitled to an exemption under section 320-40 of the ITAA 1997 for any increase in the annual management fee it imposes after 30 June 2000, which exceeds the maximum annual management fee it was entitled to impose under the terms its investment linked superannuation policy before 1 July 2000.
Facts
The terms of an investment-linked superannuation policy of a life insurance company before 1 July 2000 entitled the company to impose a maximum annual management fee of 1.5 per cent of assets under management.
After 30 June 2000 the life insurance company changed the terms and conditions of the policy to increase the maximum annual management fee it can impose to 2 per cent of assets under management
Reasons for Decision
Under subsection 320-40(1) of the ITAA 1997 a life insurance company is entitled to an exemption for one-third of specified management fees for contracts made with the company before 1 July 2000.
Subsection 320-40(4) of the ITAA 1997 provides that the fees and charges imposed by a life insurance company after 30 June 2000, on a policy entered into before 1 July 2000, are only exempt to the extent of any fees or charges that the company was entitled to make under the terms of the policy as applying immediately before 1 July 2000.
Therefore the life insurance company is only entitled to an exemption for the annual management fee it was entitled to impose before 1 July 2000.
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 2002/839
ATO ID 2002/840
ATO ID 2002/842
Keywords
Life assurance expenses
Life assurance
Life assurance industry
Management fees expenses
ISSN: 1445-2782
| Date: | Version: | |
| 10 July 2002 | Original statement | |
| You are here | 18 February 2011 | Archived |