Income Tax Assessment Act 1997
A *life insurance company can deduct the amounts paid in respect of the *risk components of claims paid under *life insurance policies during the income year. 320-80(2)
The risk component of a claim paid under a *life insurance policy is:
(i) the policy does not provide for *participating benefits or *discretionary benefits; and
(ii) the policy is neither an *exempt life insurance policy nor a *funeral policy; and
the amount paid under the policy as a result of the occurrence of that event; or
(iii) an amount is payable under the policy only on the death or disability of the insured person;
(b) if the policy provides for participating benefits or discretionary benefits or is an exempt life insurance policy or a funeral policy - nil; or
(c) otherwise - the amount paid under the policy as a result of the death or disability of the insured person less the *current termination value of the policy (calculated by an *actuary) immediately before the death, or the occurrence of the disability, of the person.
Except as provided by subsection (1), a *life insurance company cannot deduct amounts paid in respect of claims under *life insurance policies.