Private ruling: Life assurance policy
Date of advice: 17 November 2023
Published: 8 January 2024
Date scheme commenced: X July 20XX.

Ruling: Q1: Will any payment you receive on surrender of the life insurance policy held for more than 10 years be included in your assessable income? | A1: No. The payment you will receive upon surrender of the policy will not be income according to ordinary concepts under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) and will not constitute assessable income under section 26AH of the Income Tax Assessment Act 1936 (ITAA 1936). Additionally, section 118-300 of the ITAA 1997 enables any capital gain or capital loss made by the beneficial owner of a policy of life insurance to be disregarded for capital gains tax purposes. Therefore, the amount you will receive upon surrender of the policy will not be included in your assessable income. This private ruling applies for the following period: Year ending X June 202XX The scheme commenced on: X July 20XX.

Relevant facts and circumstances: You are a resident of Australia for taxation purposes. You took out a life insurance policy in 19XX with an overseas Life insurance company. The policy is a whole of life insurance policy with compounding reversionary bonus. The monthly premium of the policy was $X which you paid annually from the policy's inception in 19XX until the 20XX calendar year when you ceased paying the policy's premium. The basic assured sum of the policy, payable on death of the policy owner or maturity of the policy, is $X. The surrender value of the policy is currently around $X. You have been the sole policy owner continuously since its inception. The policy matures once it has been held for X years. You plan to surrender the entire policy in the current income year. You will receive payment of the surrender value of the policy upon its surrender.

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