Document ID: chunk:federal_register_of_legislation:F2017L00636:body:0:p10
Version: federal_register_of_legislation:F2017L00636
Segment Type: other
Provision Reference: 
Character Range: 22673–25439

also stops smoking. These changes reduce the policy cost by $100, with $60 of the decrease being because of the decision to reduce the sum insured and $40 of the decrease because of the decision to stop smoking.
           (d) The acceptable repayment for the $210 benefit for the second year is $0 because this benefit did not result from a client initiated increase in the second year. The acceptable repayment for the $90 benefit for the second year is calculated as follows. The $40 decrease in the policy cost resulting from the decision to cease smoking is ignored because it is a prescribed circumstance for the purposes of subparagraph 963BA(3)(a)(ii) of the Act: see regulation 7.7A.12EC of the Corporations Regulations 2001. Therefore the acceptable repayment for the $90 benefit is calculated on the basis of a $60 reduction in the policy cost, giving an acceptable repayment of ($90 × $60) ÷ $150 = $36: see subsections (14) and (15).
           (e) There is no acceptable repayment amount for the $600 benefit for the first year since the policy cost for the second year is greater than the policy cost for the first year. If the policy had been cancelled in the second year, the acceptable repayment for the $600 benefit would have been 60% of $600 = $360: see subsections (10) and (11).
       Note 2: The examples in Note 1 do not include GST. Depending on the circumstances, a commission given to a licensee or representative may or may not include GST. Where a commission includes a GST component, the GST component is not intended to be a benefit for the purposes of the conflicted remuneration provisions in Division 4 of Part 7.7A of the Act: see paragraph 1.29 of the Explanatory Memorandum to the Corporations Amendment (Life Insurance Remuneration Arrangements) Bill 2016.

       Part 3—Transitional

7 Acceptable benefit ratio
           (1) Despite subsection 5(2), for the purposes of subsection 963BA(2) of the Act, an acceptable benefit ratio for a benefit given to a financial services licensee, or a representative of a financial services licensee, in relation to a life risk insurance product:
              (a) for the year in which the product is issued and that is not given because of a client initiated increase; and
              (b) where the product is issued between 1 January 2018 and 31 December 2019;
              is:
              (c) where the product is issued between 1 January 2018 and 31 December 2018—the amount determined by subsection 5(2) as if the reference to "0.6" were a reference to "0.8"; and
              (d)  where the product is issued between 1 January 2019 and 31 December 2019—the amount determined by subsection 5(2) as if the reference to "0.6" were a reference to "0.7".
           (2) Despite