Private ruling: Surrender of overseas whole of life insurance policy
Date of advice: 6 March 2019
Published: May 2019
Ruling period: Period ending 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Are the bonuses received on surrender of your foreign life insurance policy assessable in Australia? | A1: No. The lump sum payment is not ordinary income or statutory income and as such is not included in your assessable income. You do not need to report the payment anywhere in your income tax return.

Relevant facts and circumstances: You have a whole of Life Assurance Policy. The Policy is governed by the laws of Country A. You commenced the policy in 198X when you purchased a house. You have sold the house. You immigrated to Australia. You have continued to pay the monthly premium from commencement of the policy You have the right to surrender your policy at any time. You are considering surrendering your policy. Your surrender amount involves payment of a Basic Policy amount plus Accrued annual increase plus special bonus and a surrender value final increase.

Relevant legislative provisions: Income tax assessment Act 1997 Section 6-5 | Income tax assessment Act 1997 Section 6-10 | Income tax assessment Act 1997 Section 15-75 | Income tax assessment Act 1936 Section 26AH