Edited version of private advice

Authorisation Number: 1052093515009

Date of advice: 8 March 2023

Ruling

Subject: Life assurance policies

Question

Is the maturity benefit you received from your Endowment insurance policy (the Policy) included in your assessable income?

Answer

No.

The payment you received on maturity of the Policy is not income according to ordinary concepts and is therefore not assessable under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997). Nor is it assessable under either section 15-75 of the ITAA 1997 or section 26AH of the Income Tax Assessment Act 1936 which deal with bonuses received from life insurance policies.

Additionally, section 118-300 of the ITAA 1997 enables any capital gain or capital loss made by the beneficial owner of a life insurance policy to be ignored for capital gains tax purposes.

Accordingly, the amounts you received from redeeming the Policy during the ruling period more than 10 years from commencement of the policy are not assessable.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You took out an Endowment insurance policy (the Policy) in 19XX.

The Policy provided for the payment of the sum insured and bonus amounts on reaching the specified maturity age or prior death of the life insured.

The Policy matured in 20XX.

At the date of maturation, the sum insured was $XX,XXX.

You received total annual bonuses of $XX,XXX, which were paid on maturation of the policy.

You received a terminal bonus of $XX, XXX.

You were paid a total maturity benefit of $XXX,XXX in 20XX.

Relevant legislative provisions

Income Tax Assessment Act 1936 section 26AH

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 section 15-75

Income Tax Assessment Act 1997 subsection 118-300(1)