Taxation Laws Amendment Act (No. 4) 2003 (66 of 2003)

Schedule 3   Non-assessable non-exempt income

Income Tax Assessment Act 1997

126   Section 320-35

Repeal the section, substitute:

320-35 Exempt income

These amounts derived by a *life insurance company are exempt from income tax:

(a) amounts of *ordinary income and *statutory income accrued before 1 July 1988 that were derived from assets that have become *virtual PST assets;

(b) if the company is an *RSA provider - any amounts that, except for the operation of subsections 320-155(3) and (4), would have been taken into account under subsection 320-155(1) in calculating the *RSA component of the *complying superannuation class of the company's taxable income.

320-37 Non-assessable non-exempt income

(1) These amounts derived by a *life insurance company are not assessable income and are not *exempt income:

(a) amounts of ordinary income and statutory income derived from *segregated exempt assets, being income that relates to the period during which the assets were segregated exempt assets;

(b) amounts of ordinary income and statutory income derived from the *disposal of units in a *pooled superannuation trust;

(c) if an *Australian/overseas fund or an *overseas fund established by the company derived *foreign establishment amounts - the non-resident proportion of the foreign establishment amounts;

(d) if the company is a *friendly society:

(i) amounts derived before 1 July 2001 that are exempt from income tax under section 50-1; and

(ii) amounts derived on or after 1 July 2001 but before 1 January 2003, that are attributable to *income bonds or *funeral policies; and

(iii) amounts derived on or after 1 July 2001 but before 1 January 2003, that are attributable to *scholarship plans and would have been exempt from income tax under section 50-1 if they had been received before 1 July 2001; and

(iv) amounts derived on or after 1 January 2003 that are attributable to income bonds or funeral policies issued before 1 January 2003; and

(v) amounts derived on or after 1 January 2003 that are attributable to scholarship plans issued before 1 January 2003 and that would have been exempt from income tax if they had been received before 1 July 2001.

(2) For the purposes of paragraph (1)(c), the non-resident proportion of the *foreign establishment amounts is the amount worked out using the formula:

Foreign establishment amounts * (Non-resident foreign establishment policy liabilities / All Foreign establishment policy liabilities)

where:

all foreign establishment policy liabilities means the total of the policy liabilities (as defined in the *Valuation Standard), calculated by an *actuary, for all *life insurance policies included in the class of *life insurance business to which the company's *Australian/overseas fund or *overseas fund relates that were issued by the permanent establishment of the company in the foreign country.

non-resident foreign establishment policy liabilities means the total of the company's policy liabilities (as defined in the Valuation Standard), calculated by an actuary, for *non-resident life insurance policies.