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EY 10: Meaning of life insurer
or “Definition of who is considered a life insurer under tax law”
You could also call this:

“Rules for superannuation schemes that offer life insurance-like benefits”

When a trustee of a superannuation scheme provides a benefit to a member or beneficiary, it’s treated as life insurance if the trustee provides life insurance to any member or beneficiary. However, this doesn’t apply if the fund meets certain requirements.

For a superannuation fund to not be considered as carrying on the business of life insurance, it must:

Be registered as a superannuation scheme or workplace savings scheme.

Not have any trustees who are companies providing life insurance under the Life Insurance Act 1908.

Be set up by employers for their employees, be part of the Government Superannuation Fund, or be part of the National Provident Fund.

Only have beneficiaries who are employees, their relatives, or employers with an interest in the fund surplus.

Require employers to make superannuation contributions to provide most of the fund benefits.

Not be set up or used in a way that goes against the rules for life insurers.

Have approval from the Financial Markets Authority (FMA) that it meets these requirements.

The FMA will notify the trustee if the fund complies with or stops complying with these rules. If you’re not happy with the FMA’s decision, you can appeal to the High Court.

In this context, a person is ‘related by employment’ if they’re a former employee getting deferred benefits, or a relative or dependent of an employee getting benefits from the fund.

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Next up: EY 12: Meaning of life reinsurance

or “Definition of life reinsurance in insurance contracts”
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Part E Timing and quantifying rules
Life insurance rules

EY 11Superannuation schemes providing life insurance

  1. The provision by a trustee of a superannuation scheme of a benefit to a member or beneficiary of the scheme is treated as the provision of life insurance if the trustee provides life insurance to any member or beneficiary, unless subsection (2) applies.

  2. A trustee of a superannuation fund is treated as not carrying on the business of life insurance for an income year if the fund meets all the requirements of subsections (3) to (9) for the income year.

  3. At all times in the income year, the fund must be registered as a superannuation scheme or a workplace savings scheme on the register of managed investment schemes (within the meaning of section 6(1) of the Financial Markets Conduct Act 2013).

  4. At all times in the income year, no trustee of the fund is a company carrying on the business of providing life insurance to which the Life Insurance Act 1908 applies.

  5. At all times in the income year, the fund must be 1 of the following kinds:

  6. a fund established by an employer, or a group of employers who are associated, to provide benefits only to persons who are employees of, or related by employment to, such an employer, or to another associated employer who agrees after the fund's establishment to make contributions to it:
    1. a fund constituted under the Government Superannuation Fund Act 1956 that provides benefits only to persons who are employees of, or related by employment to, an employer who agrees or is required to contribute, or on whose behalf contributions are made, to the fund:
      1. a fund constituted under the National Provident Fund Act 1950, the National Provident Fund Restructuring Act 1990, or the National Provident Fund Restructuring Amendment Act 1997 that has as its trustee the Board of Trustees of the National Provident Fund.

        1. At all times in the income year, each beneficiary of the fund must be—

        2. a natural person that is an employee of or related by employment to an employer of the kind referred to in subsection (5)(a) or (b):
          1. a natural person that is a beneficiary of the fund, in the case of a fund referred to in subsection (5)(c) (which refers to funds related to the National Provident Fund):
            1. an employer of members of the fund, to the extent of the employer’s contingent interest in a fund surplus.

              1. At all times in the income year, each employer is required by the trust deed or Act constituting the fund to make or is making, or having made on their behalf, superannuation contributions to provide to a significant extent the fund benefits, except to the extent to which subsection (10) applies.

              2. The fund must not have been established, and must not be being used at any time in the income year, in a way that has the effect of defeating the intent and application of the rules for life insurers.

              3. The trustee of the fund must have applied to the FMA for, and the FMA must have granted, approval that the fund is for the income year one that complies with subsections (3) to (8).

              4. Subsection (7) does not apply if—

              5. the FMA is satisfied that, for the income year, subsection (7) would have been complied with but for the fund assets exceeding the accrued benefits from the fund:
                1. the fund is one referred to in subsection (5)(c) (which refers to funds related to the National Provident Fund).

                  1. For the purposes of subsection (7), superannuation contributions that are merely nominal or that only meet the costs of administration and investment management are disregarded.

                  2. The FMA must notify the trustee of a superannuation fund as soon as practicable after determining that—

                  3. the fund complies with subsections (3) to (8) for an income year:
                    1. the fund ceases to comply with the subsections for an income year.

                      1. A person dissatisfied with the FMA's decision may appeal against the decision to the High Court and has no right of objection under the Tax Administration Act 1994.

                      2. A decision against which an appeal is lodged under subsection (13) continues in force unless the High Court orders otherwise.

                      3. In this section, a person is related by employment to an employer if the person is—

                      4. a former employee, in the case of deferred benefits relating to prior employment:
                        1. a relative or dependent of an employee, in the case of benefits arising from the employee’s or former employee’s membership in the fund.

                          Compare
                          Notes
                          • Section EY 11(3): replaced, on , by section 150 of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).
                          • Section EY 11(5) heading: substituted (with effect on 1 April 2010), on (applying for the 2010–11 and later income years), by section 57(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
                          • Section EY 11(5): substituted (with effect on 1 April 2010), on (applying for the 2010–11 and later income years), by section 57(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
                          • Section EY 11(7) heading: amended (with effect on 1 April 2008), on , by section 188(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                          • Section EY 11(7): amended (with effect on 1 April 2008), on , by section 188(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                          • Section EY 11(8): amended (with effect on 2 November 2012), on , by section 55(1) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
                          • Section EY 11(9) heading: amended, on 1 May 2011, by section 85(1) of the Financial Markets Authority Act 2011 (2011 No 5).
                          • Section EY 11(9): amended, on , by section 39(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
                          • Section EY 11(9): amended, on 1 May 2011, by section 85(1) of the Financial Markets Authority Act 2011 (2011 No 5).
                          • Section EY 11(10)(a): amended, on 1 May 2011, by section 85(1) of the Financial Markets Authority Act 2011 (2011 No 5).
                          • Section EY 11(11) heading: amended (with effect on 1 April 2008), on , by section 188(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                          • Section EY 11(11): amended (with effect on 1 April 2008), on , by section 188(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                          • Section EY 11(12) heading: amended, on 1 May 2011, by section 85(1) of the Financial Markets Authority Act 2011 (2011 No 5).
                          • Section EY 11(12): amended, on 1 May 2011, by section 85(1) of the Financial Markets Authority Act 2011 (2011 No 5).
                          • Section EY 11(13) heading: replaced, on , by section 150 of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).
                          • Section EY 11(13): replaced, on , by section 150 of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).
                          • Section EY 11(13A): inserted, on , by section 150 of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).
                          • Section EY 11 list of defined terms apply: inserted, on , by section 39(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
                          • Section EY 11 list of defined terms life insurance rules: repealed (with effect on 2 November 2012), on , by section 55(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
                          • Section EY 11 list of defined terms superannuation contribution: inserted (with effect on 1 April 2008), on , by section 188(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).