Private ruling: Life insurance
Date of advice: 18 September 2023
Published: 6 November 2023
Ruling period: Year ending in 30 June 2022
Date scheme commenced: 13 March 2022

Ruling: Q1: Will any payment you receive on cancelation of the life insurance policy held for more than 10 years be included in your assessable income?" | A1: No. In accordance with the principles established in Taxation Ruling IT 2346 Income tax: bonuses paid on certain life assurance policies - section 26AH - interpretation and operation, any bonuses paid on the withdrawal of the policy are not assessable as the commencement risk date of the policy is after 7 December 1983 and the policy has been held for more than 10 years. Therefore, any bonuses received on the cancellation and withdrawal of the policy are not assessable under section 26AH of the ITAA 1936.

Relevant facts and circumstances: You are a resident of Australia for taxation purposes. On XX X 19XX you took out an investment linked assurance policy. You are the beneficial owner of this policy. The policy is linked to the purchase and sale of investment units Premiums were paid monthly since the plan start date. Most recent premium was $XX. You cancelled the policy on XX X 20XX. You will receive a pay out of an $XX from this policy, which included a payment by way of a bonus. The policy has been held by you for more than 10 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