Private ruling: Lump sum - maturity of life insurance policy
Date of advice: 23 March 2023
Published: 15 May 2023
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is the amount you received upon maturity of your endowment policy included in your assessable income? | A1: No. The payment you received on maturity of the policy is not income according to ordinary concepts and is therefore not assessable under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997). Nor is it assessable under either section 15-75 of the ITAA 1997 or section 26AH of the Income Tax Assessment Act 1936 which deal with bonuses received from life insurance policies. Additionally, section 118-300 of the ITAA 1997 enables any capital gain or capital loss made by the beneficial owner of a life insurance policy to be ignored for capital gains tax purposes. Accordingly, the amount you received from the maturity of the policy is not assessable.

Relevant facts and circumstances: In January 19XX Person A and Person B (You) took out an endowment policy in Country A (The Policy) to repay the loan on your property in Country A. The policy included a life insurance component which paid a defined benefit in the event of death and a Country A tax free lump sum on maturity. In August 20XX You moved to Australia. You are permanent residents and citizens of Australia. The Policy matured on XX January 20XX and You received a maturity benefit.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 26AH | Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 section 15-75 | Income Tax Assessment Act 1997 subsection 118-300(1)