Document ID: chunk:federal_register_of_legislation:C2011C00610:clause:5_2:p1
Version: federal_register_of_legislation:C2011C00610
Segment Type: clause
Provision Reference: sch 5 cl 2 (pt 1/4)
Character Range: 213709–216763

2  After Division 320
Insert:

Division 321—General insurance companies and companies that self‑insure in respect of workers' compensation liabilities

Table of Subdivisions

321‑A Provision for, and payment of, claims by general insurance companies
321‑B Premium income of general insurance companies
321‑C Companies that self‑insure in respect of workers' compensation liabilities

Subdivision 321‑A—Provision for, and payment of, claims by general insurance companies

Table of sections

321‑10 Assessable income to include amount for reduction in outstanding claims liability
321‑15 Deduction for increase in outstanding claims liability
321‑20 How value of outstanding claims liability is worked out
321‑25 Deduction for claims paid during current year

321‑10  Assessable income to include amount for reduction in outstanding claims liability

  A *general insurance company's assessable income for the *current year includes an amount equal to the amount (if any) by which:
 (a) the value, at the end of the previous income year, of the company's liability for *outstanding claims under *general insurance policies; exceeds
 (b) the value, at the end of the current year, of that liability.

Note: Those values are worked out under section 321‑20.

321‑15  Deduction for increase in outstanding claims liability

  A *general insurance company can deduct for the *current year an amount equal to the amount (if any) by which:
 (a) the value, at the end of the current year, of the company's liability for *outstanding claims under *general insurance policies; exceeds
 (b) the value, at the end of the previous income year, of that liability.

Note: Those values are worked out under section 321‑20.

321‑20  How value of outstanding claims liability is worked out

  Work out the value, at the end of an income year, of a *general insurance company's liability for *outstanding claims under *general insurance policies in this way:

      Method statement
           Step 1. Add up the amounts that, at the end of the income year, the company determines, based on proper and reasonable estimates, to be appropriate to set aside and invest in order to meet:

                (a) liabilities for outstanding claims under those policies; and
                (b) direct settlement costs associated with those outstanding claims.

           Step 2. Reduce the step 1 amount by so much of it as the company expects at the end of the income year to recover:

                (a) under a contract of reinsurance; or
                (b) in any other way;

            other than under a contract of reinsurance to which subsection 148(1) of the Income Tax Assessment Act 1936 (about reinsurance with non‑residents) applies.

321‑25  Deduction for claims paid during current year

  A *general insurance company can deduct for the *current year amounts paid during that year in respect of claims under *general insurance policies.

Subdivision 321‑B—Premium income of general insurance companies

Table of sections

321‑45 Assessable income to