Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Definitions and related matters - Residence and source in New Zealand

YD 8B: Apportionment of life insurance premiums derived by Lloyd’s of London

You could also call this:

“How New Zealand taxes Lloyd's of London on life insurance premiums”

This law is about how New Zealand treats money that Lloyd’s of London gets from life insurance policies. Here’s what you need to know:

The law applies when someone in New Zealand buys a life insurance policy from Lloyd’s of London. It’s for policies that are available to everyone, but not for policies that give you a share of profits or savings, or pay you regular amounts over time.

When you pay for this kind of policy, New Zealand says that 10% of the money you pay comes from New Zealand. The other 90% doesn’t count as coming from New Zealand.

For that 10%, there are special rules:

Lloyd’s of London can’t claim any expenses against this money to lower their taxes. They have to report this income and pay tax on it in New Zealand.

There are other parts of the law that say exactly how Lloyd’s of London must report this income and pay the tax. These parts are called section HD 3, section HD 17B, and section HR 13.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS36389.

Topics:
Money and consumer rights > Taxes
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Part Y Definitions and related matters
Residence and source in New Zealand

YD 8BApportionment of life insurance premiums derived by Lloyd’s of London

  1. This section applies when—

  2. a premium is paid under a life insurance policy; and
    1. the premium is derived by Lloyd’s of London; and
      1. the life insurance policy is described in subsection (4); and
        1. the life insurance policy is offered or was offered or entered into within New Zealand.

          1. Ten percent of the gross premium is treated as having a source in New Zealand and the remainder of the gross premium is treated as not having a source in New Zealand.

          2. The following provisions apply in relation to taxation of the 10% amount:

          3. Lloyd’s of London is denied a deduction for expenditure or loss incurred, under section DW 3B (Lloyd’s of London: deductions for life insurance business):
            1. sections HD 3 (Agents’ duties and liabilities), HD 17B (Lloyd’s of London: agents for life insurance), and HR 13 (Lloyd’s of London: life insurance) impose certain obligations to provide a return of income and pay income tax on the income.

              1. The life insurance policy referred to in subsection (1) is a life insurance policy that—

              2. is made available to the general public; and
                1. is not a profit participation policy or a savings product policy or both; and
                  1. does not provide for a benefit that is an annuity.

                    Notes
                    • Section YD 8B: inserted, on (with effect on 1 April 2017 and applying in relation to a life insurance premium that is derived on or after that date by Lloyd’s of London), by section 250(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).