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Income Tax Act 2007

Timing and quantifying rules - Controlled foreign company and foreign investment fund rules - Market value rules

EX 70: Market value of life policy and superannuation entitlements

You could also call this:

“How to determine the value of life insurance and superannuation benefits for foreign investments”

When you need to figure out your Foreign Investment Fund (FIF) income or loss, you might need to know the market value of your life insurance policy or superannuation scheme benefits. Here’s how you work it out:

For a life insurance policy, the market value of your benefits is the same as the surrender value. This means how much money you would get if you ended the policy early. However, this only applies when you’re working out the cost of your benefits using section EX 64(4) and section EX 65(2).

For a superannuation scheme, it’s a bit different. The market value of your benefits is usually the total amount of money that you or someone else has put in for you up to that time. But you can only use this method if it’s too hard to work out the actual market value, and if you haven’t made any significant gains from your benefits yet.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1515747.

Topics:
Money and consumer rights > Taxes
Money and consumer rights > Savings and retirement
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“Changing the accounting year for calculating FIF income or loss”

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“Rules for buying or selling foreign investment fund interests at non-market prices”

Part E Timing and quantifying rules
Controlled foreign company and foreign investment fund rules: Market value rules

EX 70Market value of life policy and superannuation entitlements

  1. This section applies when, in order to calculate a person’s FIF income or loss, it is necessary to calculate the market value of a person’s rights to benefit under a life insurance policy or as a beneficiary under a superannuation scheme.

  2. The market value of rights to benefit under a life insurance policy is equal to their surrender value.

  3. Subsection (2) applies only for the purpose of calculating the cost of a person’s rights to benefit from a life insurance policy under—

  4. section EX 64(4); and
    1. section EX 65(2).

      1. The market value at any time of a person’s rights to benefit under a superannuation scheme is equal to the total of costs incurred up to that time by or for the person on acquiring the rights if—

      2. it is not reasonably practicable to calculate the actual market value; and
        1. they have not derived any material gain from the rights up to that time.

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