Private ruling: Foreign life assurance policy
Date of advice: 26 September 2017
Published: February 2018
Ruling period: Financial year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Question and Answer | Do you include amounts you received from a foreign life assurance policy in your assessable income? | No

Relevant facts and circumstances: You acquired a foreign life policy more than 10 years ago You paid set monthly premiums The policy matured in the financial year ended 30 June 2017

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

Reasons for decision: Summary: Section 26AH of the Income Tax Assessment Act 1936 ( ITAA 1936) provides that a taxpayer's assessable income shall include bonuses, and some other amounts in the nature of bonuses, received under a relevant life assurance policy ('an eligible policy') during a specified period ('the eligible period'). An eligible policy is defined to mean a policy of life assurance in relation to which the date of commencement of risk is after 27 August 1982, while the date of commencement of risk in relation to an eligible policy is: ● the date of commencement of the period to which the first or only premium paid under the policy relates; or ● where the first or only premium does not relate to a particular period, the date of payment of that premium. Subsection 26AH(6) of the ITAA 1936 operates to exclude bonuses and other amounts received in respect of certain short-term life assurance policies from a resident taxpayer's assessable income if the amounts are received 10 years or more from the date of commencement of risk. As the amount was paid more than 10 years after the commencement of the risk under the policy, the lump sum payment received by you from the life assurance policy is not included in your assessable income under section 26AH of the ITAA 1936 had the taxpayer held the policy directly. Further, as a bonus is not ordinary income (see Taxation Ruling IT 2504), the bonus is not included in your assessable income under subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997).