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EY 21: Shareholder base income: profit participation policies
or “Income for shareholders from certain life insurance policies”
You could also call this:

“How life insurers calculate deductions for profit-sharing policies”

You can calculate shareholder base allowable deductions for profit participation policies in a special way. Imagine you’re a life insurer and you’re working out these deductions for a year. You use a formula from section EY 21(1), but you need to change a few things.

First, pretend that you only have the asset base and nothing else. Then, instead of using asset base gross income in the formula, you use the yearly total deduction for the policies’ asset base. Finally, you don’t include the net transfers part of the formula at all.

By making these changes to the formula, you can figure out your shareholder base allowable deductions for profit participation policies for that year.

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Next up: EY 23: Reserving amounts for life insurers: non-participation policies

or “Setting aside money for non-profit participating life insurance policies”
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Part E Timing and quantifying rules
Life insurance rules: Profit participation policies

EY 22Shareholder base allowable deductions: profit participation policies

  1. For an income year, a life insurer has shareholder base allowable deductions equal to the amount they would have, for profit participation policies, under the formula in section EY 21(1) if—

  2. the life insurer is treated as having no assets other than the asset base; and
    1. the item asset base gross income is treated as being the annual total deduction for the policies' asset base; and
      1. the item net transfers is ignored.

        Notes
        • Section EY 22: substituted, on , by section 190(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
        • Section EY 22(b): amended, on , by section 37(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
        • Section EY 22(c): added, on , by section 37(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).