Income Tax Assessment Act 1997
A *life insurance company can deduct the amount (if any) by which the *value, at the end of the income year, of its liabilities under the *net risk components of *life insurance policies exceeds the value, at the end of the previous income year, of those liabilities.
Where the value at the end of the income year is less than the value at the end of the previous income year, the difference is included in assessable income: see paragraph 320-15(1)(h) .
Section 320-85 of the Income Tax (Transitional Provisions) Act 1997 makes special provision in respect of the calculation of the value of a life insurance company ' s liabilities under the net risk components of life insurance policies at the end of the income year immediately preceding the income year in which 1 July 2000 occurs.
Subsection (1) does not cover any liabilities under:
(a) a *life insurance policy that provides for *participating benefits or *discretionary benefits; or
(b) an *exempt life insurance policy; or
(ba) (Repealed by No 70 of 2015)
(c) a *funeral policy.
If a *life insurance policy is a *disability policy (other than a *continuous disability policy), the value at a particular time of the liabilities of the *life insurance company under the *net risk component of the policy is the *current termination value of the component at that time (calculated by an *actuary). 320-85(4)
In the case of *life insurance policies other than policies to which subsection (3) applies, the value at a particular time of the liabilities of the *life insurance company under the *net risk components of the policies is the amount calculated by an *actuary to be:
(a) the sum of the policy liabilities (as defined in the *Valuation Standard) in respect of the net risk components of the policies at that time;
(b) the sum of any cumulative losses (as defined in the Valuation Standard) for the net risk components of the policies at that time.
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