Document ID: chunk:federal_register_of_legislation:F2024L00075:reg:38:p49
Version: federal_register_of_legislation:F2024L00075
Segment Type: reg
Provision Reference: reg 38 (pt 49/76)
Character Range: 171206–174384

179 and ED 223 that specifically commented on the recognition and measurement proposals for tax liabilities and tax assets generally agreed with the proposals.  Accordingly, the AASB concluded that superannuation entities should be required to measure tax balances in accordance with AASB 112.

Liabilities and assets arising from insurance contracts
BC147        During its deliberations on the proposals in ED 179, the AASB noted many superannuation entities offer life and disability insurance cover to their members and some also offer income protection insurance, and that AAS 25 is silent about how to account for such arrangements.  The AASB also noted the forms of these insurance arrangements differ across entities, including those where cover is:
(a)                   offered to members, with the entity only acting as agent;
(b)                   offered to members with the entity accepting insurance risk; and
(c)                   provided to defined benefit members in relation to their projected retirement benefit.
BC148        The AASB noted that, in the case of (a), a superannuation entity is unlikely to be exposed to significant insurance risk as members or their beneficiaries would not generally have recourse to the assets of the plan, even in the event the insurer fails.  In other circumstances the entity may have significant insurance risk, even if it reinsures 100% of the risk with a third-party (re)insurer.  The AASB noted that, under the insurance standards, reinsurance does not nullify the direct contract with the policyholder.
BC149        The AASB considered a number of approaches to accounting for insurance arrangements that involve a superannuation entity having significant insurance risk, including applying AASB 137, AASB 4 Insurance Contracts, AASB 1023 and AASB 1038.
BC150        The AASB considered that many of the insurance contracts entered into by superannuation entities would meet the 'insurance contract' definition.  The AASB decided ED 179 should propose that superannuation entities account for any liabilities and assets arising from the insurance arrangements they provide to their members by applying the recognition, measurement and disclosure requirements of AASB 1038 on the basis that:
(a)                   insurance arrangements provided to superannuation members generally have the same characteristics as life insurance contracts and would meet the 'life insurance contract' definition were it not for the fact that it is confined to contracts regulated under the Life Insurance Act 1995;
(b)                   AASB 1038 has comprehensive requirements;
(c)                   AASB 4 does not include initial liability recognition requirements or comprehensive measurement requirements;
(d)                   the liability recognition and measurement requirements of AASB 1023 are based on a premium deferral model, which would not suit the circumstances of superannuation entities that would generally not receive significant premiums in advance that could be deferred; and
(e)                   AASB 137 applies only to liability recognition and measurement.
BC151        The AASB noted that applying AASB