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Income Tax Act 2007

Timing and quantifying rules - Life insurance rules - Non-participation policies

EY 19: Shareholder base income: non-participation policies

You could also call this:

“Income types counted as shareholder base income for life insurers' non-participation policies”

For an income year, some of your income as a life insurer is counted as shareholder base income if it’s related to life insurance policies that aren’t profit participation policies. This income can come from different sources:

It can be from the life risk parts of premiums and claims, but not for annuities, unless it’s described in the other points below.

It can be from fees and commissions you receive.

It can be from the life risk part of life reinsurance claims.

It can be income that meets certain requirements but isn’t included as policyholder base income.

It can be income from annuities that would meet certain requirements if the annuities were treated as savings product policies.

It can be any other income not accounted for elsewhere in this part of the law for that income year.

There’s a special rule for income that seems to be related to the life risk of a premium or life reinsurance claim. If you, as the life insurer, have worked out that the life risk is 1% or less of the premium or claim, and you choose to apply a certain rule, then this income isn’t treated as relating to the life risk part.

If any income is already included as shareholder base income under certain other sections of the law, it’s not included again under this section.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1515835.

Topics:
Money and consumer rights > Taxes
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EY 18: Policyholder base allowable deductions: profit participation policies, or

“Calculating yearly deductions for profit-sharing insurance policies”

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EY 19B: Shareholder base income: consideration credited for investment management services, or

“Life insurers' income from managing non-profit participation savings policies”

Part E Timing and quantifying rules
Life insurance rules: Non-participation policies

EY 19Shareholder base income: non-participation policies

  1. For an income year, a life insurer's income is included as their shareholder base income if it relates to life insurance policies that are not profit participation policies, and it—

  2. relates to life risk components of premiums and claims, other than for annuities, and is not described in paragraphs (b) to (db):
    1. relates to fees and commissions:
      1. relates to the life risk component of life reinsurance claims:
        1. is income meeting the requirements of section EY 15(1)(a) to (c) that is not included as their policyholder base income under section EY 15:
          1. is income relating to annuities that would meet the requirements of section EY 15(1)(a) to (c) if the annuities were treated as being savings product policies:
            1. is not otherwise accounted for in this subpart, for the income year.

              1. An amount of income relating to a policy that, but for this subsection, is an amount related to the life risk of a premium or life reinsurance claim, is treated as not relating to the life risk component for the purposes of subsection (1), if—

              2. the life insurer has actuarially determined that the life risk is 1% or less of the premium or life reinsurance claim; and
                1. chooses to apply section EY 15(5) for the policy.

                  1. If an amount is included as shareholder base income under sections EY 23 to EY 27, it is not included under this section.

                  Notes
                  • Section EY 19: substituted, on , by section 190(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                  • Section EY 19(1)(a): amended (with effect on 1 July 2010), on , by section 61(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
                  • Section EY 19(1)(d): amended (with effect on 1 July 2010), on , by section 61(2) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
                  • Section EY 19(1)(db): inserted (with effect on 1 July 2010), on , by section 61(3) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
                  • Section EY 19(2): amended, on (applying for all income years beginning on or after 1 July 2010), by section 35(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
                  • Section EY 19(3): amended, on , by section 61(4) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).