INCOME TAX ASSESSMENT ACT 1997 - SECT 320.85 Deduction for increase in value of liabilities under net risk components of life insurance policies

INCOME TAX ASSESSMENT ACT 1997 - SECT 320.85

  (1)   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.

Note 1:   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).

Note 2:   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.

  (2)   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

  (c)   a * funeral policy.

  (3)   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).

  (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;

less

  (b)   the sum of any cumulative losses (as defined in the Valuation Standard) for the net risk components of the policies at that time.