Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-35 - INSURANCE BUSINESS  

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History

Part 3-35 heading amended by No 169 of 2001.

Part 3-35 inserted by No 89 of 2000.

Division 321 - General insurance companies and companies that self-insure in respect of workers ' compensation liabilities  

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History

Div 321 inserted by No 79 of 2010 , s 3 and Sch 5 item 2, applicable to the first income year starting on or after 1 July 2010 and later income years.

Subdivision 321-A - Provision for, and payment of, claims by general insurance companies  

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Subdiv 321-A inserted by No 79 of 2010 , s 3 and Sch 5 item 2, applicable to the first income year starting on or after 1 July 2010 and later income years.

SECTION 321-20  

321-20   How value of outstanding claims liability is worked out  

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Work out the value, at the end of an income year, of a *general insurance company ' s liability for *outstanding claims under *general insurance policies in this way: Method statement

Step 1.

Add up the amounts that, at the end of the income year, the company determines, based on proper and reasonable estimates, to be appropriate to set aside and invest in order to meet:

(a) liabilities for outstanding claims under those policies; and

(b) direct settlement costs associated with those outstanding claims.

Step 2.

Reduce the step 1 amount by so much of it as the company expects at the end of the income year to recover:

(a) under a contract of reinsurance; or

(b) in any other way;

other than under a contract of reinsurance to which subsection 148(1) of the Income Tax Assessment Act 1936 (about reinsurance with non-residents) applies.

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History

S 321-20 inserted by No 79 of 2010 , s 3 and Sch 5 item 2, applicable to the first income year starting on or after 1 July 2010 and later income years.

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