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Edited version of private advice
Authorisation Number: 1052367542132
Date of advice: 11 March 2025
Ruling
Subject: Assessable income
Question 1:
Is any payment you receive from either of the policies assessable under section 6-5 Income Tax Assessment Act 1997 (ITAA 1997)?
Answer 1:
No.
The amounts you will receive on the withdrawal of all the funds from both policies after they had been held for more than X years will not be assessable under section 6-5 of the ITAA 1997 as those amounts will be capital in nature because they are merely the cashing in of the units held in the policies.
Question 2:
Is any capital gain or capital loss you make on the receipt of any payment from either of the policies disregarded under section 118-300 of the ITAA 1997?
Answer 2:
Yes.
Any capital gain or capital loss you make on the receipt of the withdrawn amounts will be disregarded under section 118-300 of the ITAA 1997 as you are the original beneficial owner of the policies.
This ruling applies for the following periods:
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
You have been in Australia for more than X years and have been a resident of Australia for taxation purposes since your arrival.
Prior to coming to Australia, you acquired two policies with Company X in your name in Country A while you were a foreign resident. Under the two policies a payment would be paid in the event of your death.
The aim of the two policies is as follows:
• Policy A - An offshore investment plan designed to build up capital over a period of years, offering a range of investment funds. It included some life cover protection: and
• Policy B - An offshore investment plan, designed to accumulate capital over a period of years, offering a selection of investment funds. The policy included some life cover protection.
Under both policies your invested funds were used to acquire units in various funds.
You will withdraw the full funds from the policies during the ruling period.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Income Tax assessment Act 1997 section 118-300