Document ID: chunk:federal_register_of_legislation:F2024L00884:body:0:p18
Version: federal_register_of_legislation:F2024L00884
Segment Type: other
Provision Reference: 
Character Range: 44942–47899

like items that are capitalised and deferred as an asset must be netted off against the balance of any income deferred as a liability relating to the products giving rise to the capitalised transaction costs (i.e. only deferred costs and income in particular product portfolios may be netted). Any net balance of capitalised transaction costs must be deducted from Common Equity Tier 1 Capital in accordance with this Prudential Standard. Any surplus of fee income received from sources other than life policies over deferred costs may be included in Common Equity Tier 1 Capital provided the fee income received satisfies the criteria in paragraph 36 of this Prudential Standard. Otherwise, up-front fee income received from sources other than life policies must not be added to capital.
17.         An investment in a subsidiary, joint venture[18] or associate that:
(a)          is operationally independent;
(b)          represents a genuine arm's length investment;
(c)          is not subject to prudential capital requirements; and
(d)          does not undertake 'life insurance business' or business related to insurance business[19]
    does not have its intangible assets (including the intangible component that could arise after or outside of acquisition) deducted under paragraph 15 of this Attachment.

Superannuation funds
18.         A life company must deduct any surplus in a defined benefit superannuation fund, of which the life company is an employer-sponsor, unless otherwise approved in writing by APRA. The surplus must be net of any associated deferred tax liability that would be extinguished if the assets involved become impaired or derecognised under Australian Accounting Standards. A life company may apply to APRA to include a surplus as an asset for capital adequacy purposes where the life company is able to demonstrate unrestricted and unfettered access to a fund surplus in a timely manner. Subject to APRA approval the life company may include the surplus in its capital base. This surplus will no longer be required to be deducted from Common Equity Tier 1 Capital.
19.         A life company must deduct any deficit in a defined benefit superannuation fund of which a life company is an employer-sponsor and that is not already reflected in Common Equity Tier 1 Capital.

Reinsurance assets
20.         A life company must deduct all reinsurance assets[20] (if positive) reported in relation to each reinsurance arrangement that, subject to a six month grace period from risk inception, does not comprise an executed and legally binding contract.

Investments in subsidiaries, joint ventures and associates
21.         A life company must make a deduction for investments in subsidiaries, joint ventures and associates that are subject to regulatory capital requirements. The amount of the deduction is the lesser of the life company's share of the regulatory capital requirements[21] and the value of the investment