Taxation Laws Amendment Act 1994 (56 of 1994)

Part 3   AMENDMENT OF THE INCOME TAX ASSESSMENT ACT 1936

Division 10   Life assurance companies and registered organizations

73   Insertion of new sections

Before section 111B of the Principal Act the following sections are inserted:

Reinsurance recoveries and refunds of premiums not assessable income

"111AB. (1) If:

(a) a life assurance company has entered into a contract of reinsurance in respect of the whole or any part of a life assurance policy; and

(b) a premium paid or payable by the company under the contract of reinsurance is not an allowable deduction to the company because of paragraph 112BA(1)(c);

the company's assessable income does not include:

(c) any amount received or recovered by it under the contract of reinsurance in respect of its liability under the life assurance policy, or the part of that policy, that was reinsured; or

(d) any amount received or recovered by it that is a refund, or in the nature of a refund, of the premium.

"(2) This section applies to assessments in respect of income of the year of income in which 1 July 1988 occurred and to assessments in respect of income of all later years of income.

Deductions to be allowable for expenditure incurred in obtaining superannuation premiums

"111AC. (1) Subject to this section, the expenses mentioned in subsection (2) that are incurred by a life assurance company in the year of income in connection with the obtaining of superannuation premiums are allowable deductions.

"(2) The expenses to which subsection (1) applies are:

(a) salaries, wages, bonuses, commissions, allowances, or similar benefits, in respect of the sale, renewal or continuation of superannuation policies; and

(b) expenditure in recruiting or training people in the selling of superannuation policies; and

(c) salaries, wages, allowances or similar benefits paid or payable to employees of the company to the extent to which the benefits relate to the provision of administrative, technical or other assistance or support to people who sell superannuation policies; and

(d) expenditure in developing, or engaging in research in connection with, superannuation policies; and

(e) any other losses or outgoings to the extent to which they are incurred in preparing, selling or issuing superannuation policies or collecting superannuation premiums.

"(3) If:

(a) a provision of this Act (other than this section or section 51 or 111AD) allows a deduction from a taxpayer's assessable income in respect of a loss, outgoing or expenditure; and

(b) the provision extends to a taxpayer that is a life assurance company; the provision has effect in determining the deductions allowable to a life assurance company as if any reference in the provision to assessable income included a reference to superannuation premiums.

"(4) Expenses incurred by a life assurance company that are of a capital nature (other than expenses in respect of which a deduction is allowable because of subsection (3)) are not allowable deductions under this section.

"(5) Expenses incurred by a life assurance company in the general management of the business of the company within the meaning of section 113 or 113A are not allowable deductions under this section.

"(6) If, assuming that:

(a) the Taxation Laws Amendment Act 1994 had not been enacted; and

(b) this Act provided that a life assurance company's assessable income included the superannuation premiums received by the company;

a deduction would not have been allowed to a life assurance company in respect of a loss, outgoing or expenditure or a part of a loss, outgoing or expenditure, then, a deduction is not allowable to the company in respect of the loss, outgoing or expenditure or the part of the loss, outgoing or expenditure, as the case may be, under this section or under another provision of this Act as it has effect because of this section.

"(7) A reference in this section to a deduction in respect of a loss, outgoing or expenditure includes a reference to a deduction based on, or calculated by reference to, all or a portion of the loss, outgoing or expenditure.

"(8) In this section:

'superannuation premiums' does not include:

(a) premiums received in respect of eligible non-resident policies; or

(b) premiums exempt from tax under section 23AH; or

(c) premiums exempt from tax under paragraph 23(r).

"(9) This section applies to expenses incurred, or to deductions in respect of a loss, outgoing or expenditure incurred, on or after 1 January 1994.

Deductions to be allowable for expenditure incurred in obtaining the investment component of certain premiums

"111AD.(1) In this section:

'relevant life assurance premiums' means premiums received in respect of life assurance policies other than:

(a) superannuation premiums; or

(b) premiums received in respect of exempt policies; or

(c) specified roll-over amounts; or

(d) premiums received in respect of eligible non-resident policies; or

(e) premiums exempt from tax under section 23AH; or

(f) premiums exempt from tax under paragraph 23(r);

'relevant life assurance policy' means a life assurance policy in respect of which premiums received are relevant life assurance premiums.

"(2) Subject to this section, the expenses mentioned in subsection (3) that are incurred by a life assurance company in the year of income in connection with the obtaining of relevant life assurance premiums, to the extent to which the expenses relate to the investment component of those premiums, are allowable deductions.

"(3) The expenses to which subsection (2) applies are:

(a) salaries, wages, bonuses, commissions, allowances, or similar benefits, in respect of the sale, renewal or continuation of relevant life assurance policies; and

(b) expenditure in recruiting or training people in the selling of relevant life assurance policies; and

(c) salaries, wages, allowances or similar benefits paid or payable to employees of the company to the extent to which the benefits relate to the provision of administrative, technical or other assistance or support to people who sell relevant life assurance policies; and

(d) expenditure in developing, or engaging in research in connection with, relevant life assurance policies; and

(e) any other losses or outgoings to the extent to which they are incurred in preparing, selling or issuing relevant life assurance policies or collecting relevant life assurance premiums.

"(4) If:

(a) a provision of this Act (other than this section or section 51 or 111AC) allows a deduction from a taxpayer's assessable income in respect of a loss, outgoing or expenditure; and

(b) the provision extends to a taxpayer that is a life assurance company;

the provision has effect in determining the deductions allowable to a life assurance company as if any reference in the provision to assessable income included a reference to the investment component of relevant life assurance premiums.

"(5) Expenses incurred by a life assurance company that are of a capital nature (other than expenses in respect of which a deduction is allowable because of subsection (4)) are not allowable deductions under this section.

"(6) Expenses incurred by a life assurance company in the general management of the business of the company within the meaning of section 113 or 113A are not allowable deductions under this section.

"(7) If, assuming that:

(a) the Taxation Laws Amendment Act 1994 had not been enacted; and

(b) this Act provided that a life assurance company's assessable income included the investment component of relevant life assurance premiums received by the company;

a deduction would not have been allowed to a life assurance company in respect of a loss, outgoing or expenditure or a part of a loss, outgoing or expenditure, then, a deduction is not allowable to the company in respect of the loss, outgoing or expenditure or the part of the loss, outgoing or expenditure, as the case may be, under this section or under another provision of this Act as it has effect because of this section.

"(8) This section does not apply to premiums derived by a life assurance company in a year of income unless the company obtains a certificate by an authorised actuary, in the approved form, with respect to the operation of this section in relation to that year of income, before the date of lodgment of the return of income of the company of the year of income or within such further time as the Commissioner allows.

"(9) A reference in this section to a deduction in respect of a loss, outgoing or expenditure includes a reference to a deduction based on, or calculated by reference to, all or a portion of the loss, outgoing or expenditure.

"(10) This section applies to expenses incurred, or to deductions in respect of a loss, outgoing or expenditure incurred, on or after 1 January 1994.".