Private ruling: Foreign life insurance policy
Date of advice: 15 April 2026
Published: 29 June 2026
Ruling period: Year ended 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Is the lump sum you received upon your foreign insurance policy vesting assessable income? | A1: No. The lump sum payment you will receive on the maturity of your foreign life insurance 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). In addition, as your foreign life insurance policy has reached its full term after a date more than 10 years after the date of commencement, the lump sum payment is not assessable under section 26AH of the Income Tax Assessment Act 1936. | Q2: Will any capital gain be disregarded under section 118-300 of the ITAA 1997? | A2: Yes. 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, any capital gain or capital loss made by you, for the life insurance policy vested can be ignored for capital gains tax purposes.

Relevant facts and circumstances: You held a life insurance policy in Country X, which you opened on DD MM 20YY. The life insurance policy included linked insurance policies. You made contributions to the life insurance policy. You renewed the life insurance policy. The life insurance policy has profits that accumulate over the membership and vest at retirement or upon another condition of vesting. In Country X, amounts received upon the life insurance policy vesting are tax free. On DD MM 20YY, you arrived in Australia and became a resident of Australia for tax purposes. From 20YY to 20YY, you paid an amount to maintain the life insurance policy. On DD MM 20YY, the life insurance policy vested. You received an amount in Country X currency when the life insurance policy vested. The vesting of the life insurance policy was managed by Company A in Country X. On DD MM 20YY, the vested funds were paid to Company A. The funds took some time to clear to allow you to transfer them to Australia. The vested funds were transferred to Australia in several payments.

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