Private ruling: Life insurance policy
Date of advice: 30 January 2023
Published: 13 March 2023
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will any payment you receive on maturity of the life insurance policy held for more than 10 years be included in your assessable income? | A1: No. The payment you will receive on maturity of the policy will not be income according to ordinary concepts under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) and will not constitute assessable income under section 26AH of the Income Tax Assessment Act 1936 (ITAA 1936). Additionally, section 118-300 of the ITAA 1997 enables any capital gain or capital loss made by the beneficial owner of a policy of life insurance to be ignored for capital gains tax purposes. Accordingly, the amount you receive from redeeming the policy held for more than 10 years will not be included in your assessable income.

Relevant facts and circumstances: You are a resident of Australia for taxation purposes. On 10 XXXX 20XX you took out a life insurance policy with an overseas company. There was a guaranteed amount if you died within X years payable to your estate. The policy matures on 10 XXXX 20XX. You will receive a pay out of an amount from this policy. The policy has been held by you for X years.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5 | Income Tax Assessment Act 1997 Section 118-300 | Income Tax Assessment Act 1936 Section 26AH