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INCOME TAX ASSESSMENT ACT 1997 - SECT 713.565

Treatment of certain liabilities for income year when life insurance company leaves consolidated group

             (1)  This section affects how paragraph 320-15(1)(h) and section 320- 85 apply if:

                     (a)  a * life insurance company ceases to be a * subsidiary member of a * consolidated group at a time (the leaving time ); and

                     (b)  at the leaving time, the * life insurance company has one or more liabilities under the * net risk components of life insurance policies.

Note:          Paragraph 320-15(1)(h) and section 320- 85 both operate on the basis of a comparison of the value of a life insurance company's liabilities under the net risk components of life insurance policies at the end of the current year with the value of those liabilities at the end of the previous year, so that:

(a)    that paragraph includes an amount in the company's assessable income for the current year if the value at the end of the current year is less than the value at the end of the previous income year; and

(b)    that section allows a deduction for the current year if the value at the end of the current year is more than the value at the end of the previous income year.

             (2)  The object of this section is to ensure that:

                     (a)  the * head company of the * consolidated group bears the income tax consequences relating to a change in * value of the liabilities before the leaving time; and

                     (b)  the * life insurance company bears the income tax consequences relating to a change in value of the liabilities after the leaving time.

Head company's income or deduction from liabilities

             (3)  For the head company core purposes set out in section 701-1 (Single entity rule) relating to the income year in which the leaving time occurs (but not later income years), paragraph 320-15(1)(h) and section 320- 85 have effect as if:

                     (a)  the * head company of the * consolidated group had the liabilities at the end of that income year; and

                     (b)  the * value of the liabilities at the end of that income year had been the amount that was actually the value of the liabilities (for the * life insurance company) at the leaving time.

Life insurance company's income or deduction from liabilities

             (4)  For the entity core purposes set out in section 701-1 (Single entity rule) relating to the * life insurance company and the income year in which the leaving time occurs, paragraph 320-15(1)(h) and section 320- 85 have effect as if the * value of the liabilities at the end of the previous income year had been the amount that was actually the value of the liabilities (for the life insurance company) at the leaving time.

Losses for life insurance companies leaving consolidated group



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