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Income Tax Act 2007

Timing and quantifying rules - Life insurance rules

EY 1: What this subpart does

You could also call this:

“This subpart explains how life insurance companies are taxed in New Zealand”

This part of the law talks about how life insurance companies are taxed in New Zealand. It explains that there are two different ways to tax life insurers: the policyholder base and the shareholder base.

You’ll find information about how income and deductions are split between these two bases in sections EY 2 and EY 3. There are also special rules about tax credits for life insurers in section LA 8B. If you want to know more about tax credits and special accounts for life insurers, you can look in Parts L and O.

Section EY 2 explains how to work out a life insurer’s schedular policyholder base income. This is done by looking at the money coming in (assessable income) and the money going out (allowable deductions) in the policyholder base. However, if a life insurer has a special type of investment fund called a multi-rate PIE, the income from that fund isn’t included in this calculation.

It’s important to know that all income and deductions must be split between the policyholder base and the shareholder base. The law makes sure that nothing is counted twice.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1515758.

Topics:
Money and consumer rights > Taxes
Business > Industry rules
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EY 2: Policyholder base, or

“Income and deductions for life insurers related to policyholders”

Part E Timing and quantifying rules
Life insurance rules

EY 1What this subpart does

  1. This subpart provides for the taxation of life insurers on 2 separate bases, the policyholder base and the shareholder base. Sections EY 2 and EY 3 describe the general apportionment of income and deductions between the 2 bases under this Part. Section LA 8B (General rules particular to life insurers) provides some general rules for tax credits relating to the 2 bases. Parts L and O include tax credit rules and memorandum account rules specific to the 2 bases.

  2. Section EY 2 uses the assessable income in a life insurer's policyholder base income, and the life insurer's policyholder base allowable deductions, to calculate their schedular policyholder base income. A life insurer's schedular income derived by their life fund PIE that is a multi-rate PIE is excluded from their schedular policyholder base income, along with deductions for that income.

  3. Income and deductions must be apportioned to either the policyholder base or the shareholder base. There is no double-counting.

Notes
  • Section EY 1: substituted, on , by section 185(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).