Private ruling: Life assurance policy
Date of advice: 3 September 2020
Published: October 2020
Ruling period: Year ended 30 June 2020 | Year ending 30 June 2021 | Year ending 30 June 2022 | Year ending 30 June 2023 | Year ending 30 June 2024
Date scheme commenced: 1 July 2019

Ruling: Q1: Is the life insurance bond an eligible policy for the purposes of section 26AH of the Income Tax Assessment Act 1936 (ITAA 1936)? | A1: Yes. Based on the information provided, we can conclude that policy is an eligible policy for the purpose of the taxation of reversionary bonuses within the relevant time frames under 26AH of the ITAA 1936.

Relevant facts and circumstances: You left Australia with your family in early 20XX to live and work in overseas. Currently, you are not a resident of Australia for tax purposes. You may return to live in Australia within the next few years and become a resident of Australia for tax purpose at that time. You purchased an insurance policy which was signed and issued mid 20XX. Clause 12.7 of the policy states: You legally own the Policy. As we legally and beneficially own the Investments, they will be held in our name which means you have no right to specific Investments. Investments may be pooled with Investments held by us for other policyholders and their entitlements may not be identifiable by separate certificates, other documents of ownership or equivalent electronic records. You intend holding the insurance policy for more than 10 years from the date of issue. Assumption The taxpayer will in no year pay an amount of premiums that exceeds by more than 25% the amount of the premiums payable under the policy in relation to the immediately preceding assurance year.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 26AH | Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 section 6-10