Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard   

Previous Fragment    Next Fragment
Thursday, 24 March 1994
Page: 2165


Senator COOK (Minister for Industry, Technology and Regional Development) (11.57 a.m.) —There are two propositions here—if I might term them as propositions—which on the surface appear to be slightly different. One is in the form of a question from Senator Harradine: upon asking the Attorney-General to re-examine the advice that has been offered on this occasion, would I report back to the Senate what the findings of the Attorney-General are in a more leisurely examination? The answer to that question is yes, I would, and provide any further advice that the Attorney-General may offer to the Senate. I think that is quite reasonable, and it ought to be done.

   I think the second proposition is really an intervention by way of a viewpoint expressed by Senator Coulter as to the better way of handling this, that is to say, take it to a committee. What the Senate might contemplate is, upon getting the further advice of the Attorney-General, that Senator Coulter's question then be dealt with. So the Attorney-General can consider again and advise again, and that leaves the position of having the second opinion of the Attorney-General before such a committee of inquiry, if a committee of inquiry, in view of that opinion, were felt to be necessary. I raise this only in order to expedite the proceedings, because there is a convergence of minds here that some deadlock-breaking approach needs to be taken. I move:

  That the House of Representatives be requested to make the following amendment:

Clause 2, page 2, at end of clause, add the following subclauses:

  "(5) Subsection 70B(1) is taken to have commenced immediately after the commencement of section 16 of the Taxation Laws Amendment (Superannuation) Act 1989.

  "(6) Subsection 70C(1) is taken to have commenced immediately after the commencement of section 11 of the Taxation Laws Amendment Act (No. 5) 1989.

  "(7) Subsection 70G(1) is taken to have commenced immediately after section 12 of the Taxation Laws Amendment Act (No. 5) 1989.

  "(8) Subsection 70Q(1) is taken to have commenced immediately after the commencement of section 24 of the Taxation Laws Amendment (Superannuation) Act 1989.

  "(9) Subsections 70B(2), 70C(2) and 70Q(2) are taken to have commenced immediately after the commencement of the Taxation Laws Amendment (Foreign Income) Act 1990.

  "(10) Section 94 is taken to have commenced immediately after the commencement of section 17 of the Taxation Laws Amendment (Superannuation) Act 1989.".

  Request agreed to.

  Clause 2 agreed to, subject to a request for an amendment.

  Clause 48.

  Motion (by Senator Cook) agreed to:

  That the House of Representatives be requested to make the following amendment:

Clause 48, page 19, lines 11 to 15, omit the clause, substitute the following clause:

Application of amendments

  "48.(1) The amendments made by sections 42, 46 and 47 apply for the 1994-95 year of income and all later years of income.

  "(2) The amendments made by sections 43, 44 and 45 apply for the 1995-96 year of income and all later years of income.".

  Clause 48 agreed to, subject to a request for an amendment.

  Remainder of bill—by leave—taken as a whole.

  Motion (by Senator Cook)—by leave—agreed to:

  That the House of Representatives be requested to make the following amendments:

After Division 10, page 33, insert the following Division:

  "Division 10A—Life assurance companies and registered organizations

Object of Division

  "70A. The object of this Division is to clarify the deductions allowable to life assurance companies and registered organizations.

Deductions to be allowable for expenditure incurred in gaining superannuation premiums

  "70B.(1) Section 111A of the Principal Act is amended by adding at the end the following subsection:

  `(1A) For the purposes of the application of this section to assessments in respect of income of the year of income in which 1 July 1988 occurred and to assessments in respect of income of any later year of income that is derived before the end of the 1989-90 year of income, the reference in subsection (1) to superannuation premiums does not include a reference to premiums that are:

(a)received in respect of a superannuation policy issued by a life assurance company in the course of a business carried on by it at or through a permanent establishment of the company in a foreign country; or

(b)exempt from tax under paragraph 23(r).'.

  "(2) Section 111A of the Principal Act is amended:

(a)by omitting subsection (2);

(b)by adding at the end the following subsection:

`(3) For the purposes of the application of this section to assessments in respect of income of the 1990-91 year of income or to assessments in respect of income of any later year of income, the reference in subsection (1) to superannuation premiums does not include a reference to premiums that are:

  (a)received in respect of eligible non-resident policies; or

  (b)exempt from tax under section 23AH; or

  (c)exempt from tax under paragraph 23(r).'.

  "(3) Section 111A of the Principal Act is amended by adding at the end the following subsection:

  `(4) This section does not apply, and is taken not to have applied, to superannuation premiums received on or after 1 January 1994.'.

Deductions to be allowable for expenditure incurred in gaining the investment component of certain premiums

  "70C.(1) Section 111AA of the Principal Act is amended by inserting after subsection (1) the following subsection:

  `(1A) The reference in subsection (1) to premiums received in respect of life assurance policies does not include a reference to premiums that are received on or after 1 January 1990 and before the end of the 1989-90 year of income and:

(a)are so received in respect of a life assurance policy issued by a life assurance company in the course of a business carried on by it at or through a permanent establishment of the company in a foreign country; or

(b)are exempt from tax under paragraph 23(r).'.

  "(2) Section 111AA of the Principal Act is amended:

(a)by omitting from paragraph (1)(c) `amounts; or' and substituting `amounts.';

(b)by omitting paragraphs (1)(d) and (e);

(c)by inserting after subsection (1A) the following subsection:

`(1B) For the purposes of the application of this section to assessments in respect of income of the 1990-91 year of income or to assessments in respect of income of later years of income, the reference in subsection (1) to premiums received in respect of life assurance policies does not include a reference to premiums that are:

(a)received in respect of eligible non-resident policies; or

(b)exempt from tax under section 23AH; or

(c)exempt from tax under paragraph 23(r).'.

  "(3) Section 111AA of the Principal Act is amended by adding at the end the following subsection:

  `(4) This section does not apply, and is taken not to have applied, to premiums received on or after 1 January 1994.'.

  "(4) If, in relation to a particular life assurance company:

(a)as a result of an amendment made by this section, the premiums to which section 111AA of the Principal Act as amended by this section applies in respect of a year of income differ from the premiums to which that section would have applied in respect of that year of income if the amendment had not been made; and

(b)the company obtained a certificate under section 111AA of the Principal Act in relation to that year of income;

section 111AA of the Principal Act as amended by this section is taken not to have applied to premiums received by the company in that year of income unless:

(c)after the commencement of this subsection the company furnishes an amended return in respect of that year of income; and

(d)after that commencement but before the amended return is furnished (or within such further period as the Commissioner allows) the company obtains a further certificate under section 111AA of the Principal Act as amended by this section with respect to the operation of that section in relation to that year of income.

Repeal of sections 111A and 111AA

  "70D. Sections 111A and 111AA of the Principal Act are repealed.

Insertion of new sections

  "70E. Before section 111B of the Principal Act the following sections are inserted:

Reinsurance recoveries and refunds of premiums not assessable income

  `111AB.(1) If:

(a) a life assurance company has entered into a contract of reinsurance in respect of the whole or any part of a life assurance policy; and

(b) a premium paid or payable by the company under the contract of reinsurance is not an allowable deduction to the company because of paragraph 112BA(1)(c);

the company's assessable income does not include:

(c) any amount received or recovered by it under the contract of reinsurance in respect of its liability under the life assurance policy, or the part of that policy, that was reinsured; or

(d) any amount received or recovered by it that is a refund, or in the nature of a refund, of the premium.

  `(2) This section applies to assessments in respect of income of the year of income in which 1 July 1988 occurred and to assessments in respect of income of all later years of income.

Deductions to be allowable for expenditure incurred in obtaining superannuation premiums

  `111AC.(1) Subject to this section, the expenses mentioned in subsection (2) that are incurred by a life assurance company in the year of income in connection with the obtaining of superannuation premiums are allowable deductions.

  `(2) The expenses to which subsection (1) applies are:

(a)salaries, wages, bonuses, commissions, allowances, or similar benefits, in respect of the sale, renewal or continuation of superannuation policies; and

(b)expenditure in recruiting or training people in the selling of superannuation policies; and

(c)salaries, wages, allowances or similar benefits paid or payable to employees of the company to the extent to which the benefits relate to the provision of administrative, technical or other assistance or support to people who sell superannuation policies; and

(d)expenditure in developing, or engaging in research in connection with, superannuation policies; and

(e)any other losses or outgoings to the extent to which they are incurred in preparing, selling or issuing superannuation policies or collecting superannuation premiums.

  `(3) If:

(a)a provision of this Act (other than this section or section 51 or 111AD) allows a deduction from a taxpayer's assessable income in respect of a loss, outgoing or expenditure; and

(b)the provision extends to a taxpayer that is a life assurance company;

the provision has effect in determining the deductions allowable to a life assurance company as if any reference in the provision to assessable income included a reference to superannuation premiums.

  `(4) Expenses incurred by a life assurance company that are of a capital nature (other than expenses in respect of which a deduction is allowable because of subsection (3)) are not allowable deductions under this section.

  `(5) Expenses incurred by a life assurance company in the general management of the business of the company within the meaning of section 113 or 113A are not allowable deductions under this section.

  `(6) If, assuming that:

(a)the Taxation Laws Amendment Act (No. 4) 1993 had not been enacted; and

(b)this Act provided that a life assurance company's assessable income included the superannuation premiums received by the company;

a deduction would not have been allowed to a life assurance company in respect of a loss, outgoing or expenditure or a part of a loss, outgoing or expenditure, then, a deduction is not allowable to the company in respect of the loss, outgoing or expenditure or the part of the loss, outgoing or expenditure, as the case may be, under this section or under another provision of this Act as it has effect because of this section.

  `(7) A reference in this section to a deduction in respect of a loss, outgoing or expenditure includes a reference to a deduction based on, or calculated by reference to, all or a portion of the loss, outgoing or expenditure.

  `(8) In this section:

"superannuation premiums" does not include:

(a) premiums received in respect of eligible non-resident policies; or

(b) premiums exempt from tax under section 23AH; or

(c) premiums exempt from tax under paragraph 23(r).

  `(9) This section applies to expenses incurred, or to deductions in respect of a loss, outgoing or expenditure incurred, on or after 1 January 1994.

Deductions to be allowable for expenditure incurred in obtaining the investment component of certain premiums

  `111AD.(1) In this section:

"relevant life assurance premiums" means premiums received in respect of life assurance policies other than:

(a)superannuation premiums; or

(b)premiums received in respect of exempt policies; or

(c)specified roll-over amounts; or

(d)premiums received in respect of eligible non-resident policies; or

(e)premiums exempt from tax under section 23AH; or

(f)premiums exempt from tax under paragraph 23(r);

"relevant life assurance policy" means a life assurance policy in respect of which premiums received are relevant life assurance premiums.

  `(2) Subject to this section, the expenses mentioned in subsection (3) that are incurred by a life assurance company in the year of income in connection with the obtaining of relevant life assurance premiums, to the extent to which the expenses relate to the investment component of those premiums, are allowable deductions.

`(3) The expenses to which subsection (2) applies are:

(a)salaries, wage, bonuses, commissions, allowances, or similar benefits, in respect of the sale, renewal or continuation of relevant life assurance policies; and

(b)expenditure in recruiting or training people in the selling of relevant life assurance policies; and

(c) salaries, wage, allowances or similar benefits paid or payable to employees of the company to the extent to which the benefits relate to the provision of administrative, technical or other assistance or support to people who sell relevant life assurance policies; and

(d) expenditure in developing, or engaging in research in connection with, relevant life assurance policies; and

(e) any other losses or outgoings to the extent to which they are incurred in preparing, selling or issuing relevant life assurance policies or collecting relevant life assurance premiums.

  `(4) If:

(a)a provision of this Act (other than this section or section 51 or 111AC) allows a deduction from a taxpayer's assessable income in respect of a loss, outgoing or expenditure; and

(b) the provision extends to a taxpayer that is a life assurance company;

the provision has effect in determining the deductions allowable to a life assurance company as if any reference in the provision to assessable income included a reference to the investment component of relevant life assurance premiums.

  `(5) Expenses incurred by a life assurance company that are of a capital nature (other than expenses in respect of which a deduction is allowable because of subsection (4)) are not allowable deductions under this section.

  `(6) Expenses incurred by a life assurance company in the general management of the business of the company within the meaning of section 113 or 113A are not allowable deductions under this section.

  `(7) If, assuming that:

(a)the Taxation Laws Amendment Act (No. 4) 1993 had not been enacted; and

(b) this Act provided that a life assurance company's assessable income included the investment component of relevant life assurance premiums received by the company;

a deduction would not have been allowed to a life assurance company in respect of a loss, outgoing or expenditure or a part of a loss, outgoing or expenditure, then, a deduction is not allowable to the company in respect of the loss, outgoing or expenditure or the part of the loss, outgoing or expenditure, as the case may be, under this section or under another provision of this Act as it has effect because of this section.

  `(8) This section does not apply to premiums derived by a life assurance company in a year of income unless the company obtains a certificate by an authorised actuary, in the approved form, with respect to the operation of this section in relation to that year of income, before the date of lodgment of the return of income of the company of the year of income or within such further time as the Commissioner allows.

  `(9) A reference in this section to a deduction in respect of a loss, outgoing or expenditure includes a reference to a deduction based on, or calculated by reference to, all or a portion of the loss, outgoing or expenditure.

  `(10) This section applies to expenses incurred, or to deductions in respect of a loss, outgoing or expenditure incurred, on or after 1 January 1994.'.

Reduction in deductions that are not exclusively related to producing assessable income

  "70F.(1) Section 111C of the Principal Act is amended:

(a) by omitting from paragraph (1)(a) `51 or 113' and substituting `51, 111AC (other than subsection (3)), 111AD (other than subsection (4)) or 113';

(b) by omitting from subsection (2) all the words from and including `where:' to the end of the subsection;

(c)by adding at the end the following subsection:

`(4) In this section:

"Deduction" means the amount of the deduction concerned;

"Assessable income", in relation to a life assurance company includes:

(a) superannuation premiums to which section 111AC applies that are received by the company; and

(b)the investment component of relevant life assurance premiums to which section 111AD applies that are received by the company;

"Total income" means the total of all the amounts that would be assessable income of the company apart from any exempting provision.'.

  "(2) The amendment made by paragraph (1)(a) applies in apportioning deductions in respect of a loss, outgoing or expenditure (including a deduction based on, or calculated by reference to, all or a portion of a loss, outgoing or expenditure) incurred on or after 1 January 1994.

  "(3) The amendments made by paragraphs (1)(b) and (c) apply in respect of premiums received on or after 1 January 1994.

Deductions not allowable for expenditure incurred in gaining certain premium income

  "70G.(1) Section 112 of the Principal Act is amended by inserting in subparagraph (1)(a)(i) "to which section 111A applies" after "premiums".

  "(2) The amendment made by subsection (1) applies to expenditure incurred on or after 1 January 1990.

Repeal of section and substitution of new section

  "70H. Section 112 of the Principal Act is repealed and the following section is substituted:

Deductions not allowable for expenditure incurred in gaining certain premium income

  `112.(1) A deduction is not allowable to a life assurance company in respect of expenditure incurred exclusively in gaining:

(a) premiums that are excluded from assessable income by section 111 other than:

  (i)superannuation premiums to which section 111AC applies; or

  (ii)the investment component of relevant life assurance premiums to which section 111AD applies; or

(b) the risk component of any such relevant life assurance premiums.

  `(2) This section applies to expenditure incurred on or after 1 January 1994.'.

Insertion of new section

  "70J. After section 112A of the Principal Act the following section is inserted:

Deductions not allowable for benefits or reinsurance premiums

  `112BA.(1) Despite any other provision of this Act, a deduction is not allowable to a life assurance company in respect of:

(a)a benefit paid or payable under a life assurance policy; or

(b)the inclusion of an amount in the company's reserves for the purpose of meeting any future liability (including a contingent liability) of the company to pay benefits to which paragraph (a) would apply; or

(c)a premium paid or payable by the company in respect of the reinsurance of the whole or any part of a life assurance policy; or

(d)an amount paid or payable to, or to an associate of, the holder of a life assurance policy in settlement of a dispute as to the liability of the company under the policy.

  `(2) A reference in subsection (1) to a benefit paid or payable under a life assurance policy:

(a)includes a reference to an amount paid or payable:

  (i) in respect of a claim under the policy; or

  (ii) as consideration for, in connection with, or as a consequence of, the surrender, cancellation, forfeiture, termination or disposal of the policy or any rights under the policy; or

  (iii) in respect of a bonus under the policy; or

  (iv) in respect of an annuity under the policy; or

  (v) that is a refund, or is in the nature of a refund, of a premium that, under section 111, is not included in the company's assessable income; but

(b) does not include any interest payable under section 57 of the Insurance Contracts Act 1984.

  `(3) To remove any doubt, it is declared that a supplementary benefit (known as a rider benefit) that is paid or payable in respect of a non-life assurance risk (including an accident and disability risk, a sickness risk and a trauma risk) and in respect of which the premiums received by the life assurance company that issued the relevant life assurance policy are included in the company's assessable income is not a benefit paid or payable under a life assurance policy for the purposes of subsection (1).

  `(4) In this section:

"associate" has the same meaning as in subsection 26AAB(14).

  `(5) This section applies to assessments in respect of income of the year of income in which 1 July 1988 occurred and to assessments in respect of income of all later years of income.'.

Expenses of general management relating to producing assessable income

  "70K.(1) Section 113 of the Principal Act is amended by adding at the end the following subsection:

  `(5) In this section:

"assessable income", in relation to a life insurance company, includes:

(a)superannuation premiums to which section 111AC applies that are received by the company; and

(b) the investment component of relevant life assurance premiums to which section 111AD applies that are received by the company.'.

  "(2) The amendment made by subsection (1) applies to expenditure incurred on or after 1 January 1994.

Insertion of new section

  "70L. After section 113 of the Principal Act the following section is inserted:

Expenses of general management incurred in obtaining certain premiums

  `113A.(1) If:

(a)expenditure is incurred by a life assurance company in the year of income in the general management of the company's business; and

(b) the expenditure is not an allowable deduction under section 113 because of paragraph 113(3)(b);

the expenditure is an allowable deduction to the extent to which it was incurred in gaining or producing:

(c) superannuation premiums to which section 111AC applies; or

(d) the investment component of relevant life insurance premiums to which section 111AD applies.

  `(2) If, assuming that:

(a) the Taxation Laws Amendment Act (No. 4) 1993 had not been enacted; and

(b) this Act provided that a life assurance company's assessable income included the superannuation premiums and the investment component of relevant life assurance premiums received by the company;

a deduction would not have been allowed to a life assurance company in respect of a loss, outgoing or expenditure or a part of a loss, outgoing or expenditure, then, a deduction is not allowable to the company in respect of the loss, outgoing or expenditure or the part of the loss, outgoing or expenditure, as the case may be, under this section.

  `(3) For the purposes of this section, expenditure of a capital nature is taken not to be expenditure incurred in the general management of the business of the company.

  `(4) A reference in this section to a deduction in respect of a loss, outgoing or expenditure includes a reference to a deduction based on, or calculated by reference to, all or a portion of the loss, outgoing or expenditure.

  `(5) In this section:

"relevant life assurance premiums" means premiums received in respect of life assurance policies other than:

(a)superannuation premiums; or

(b)premiums received in respect of exempt policies; or

(c)specified roll-over amounts; or

(d)premiums received in respect of eligible non-resident policies; or

(e)premiums exempt from tax under section 23AH; or

(f)premiums exempt from tax under paragraph 23(r).

  `(6) This section applies to expenses incurred, or to deductions in respect of a loss, outgoing or expenditure incurred, on or after 1 January 1994.'.

Apportionment of current year deductions between classes

  "70M.(1) Section 116CF of the Principal Act is amended:

(a)by omitting from subsections (4), (5) and (6) `subsection 111A(1)' and substituting `section 111AC'; and

(b) by omitting from subsections (4), (6) and (7) `section 111AA' and substituting `section 111AD'.

  "(2) Subsections 116CF(4), (5), (6) and (7) of the Principal Act as amended by subsection (1) of this section apply in relation to premiums received by a life assurance company on or after 1 January 1994.

Insertion of new section

  "70N. After section 116GD of the Principal Act the following section is inserted:

Reinsurance recoveries and refunds of premiums not assessable income

  `116GE.(1) If:

(a) a registered organization has entered into a contract of reinsurance in respect of the whole or any part of a life assurance policy; and

(b) a premium paid or payable by the organization under the contract of reinsurance is not an allowable deduction to the organization because of paragraph 116HAD(1)(c);

the organization's assessable income does not include:

(c) any amount received or recovered by it under the contract of reinsurance in respect of its liability under the life assurance policy, or the part of that policy, that was reinsured; or

(d) any amount received or recovered by it that is a refund, or in the nature of a refund, of the premium.

  `(2) This section applies to assessments in respect of income of the year of income in which 1 July 1988 occurred and to assessments in respect of income of all later years of income.'.

Deductions allowable from assessable income of registered organizations

  "70P.(1) Section 116H of the Principal Act is amended:

(a) by inserting after paragraph (a) the following paragraph:

`(aa) any deductions that, apart from this section, would be allowable to the organization in relation to the year of income under section 116HAB or 116HAC; and';

(b) by adding at the end the following subsection:

`(2) In paragraph (1)(b):

"assessable income", in relation to a registered organization:

  (a)includes superannuation premiums to which section 116HAB applies that are received on or after 1 January 1994 by the organization; and

  (b)includes the investment component of relevant life assurance premiums to which section 116HAC applies that are received on or after 1 July 1994 by the organization.'.

  "(2) The amendment made by paragraph (1)(a) applies to deductions in respect of a loss, outgoing or expenditure (including a deduction based on, or calculated by reference to, all or a portion of a loss, outgoing or expenditure) incurred:

(a)in respect of deductions under section 116HAB—on or after 1 January 1994; or

(b)in respect of deductions under section 116HAC—on or after 1 July 1994.

Deductions to be allowable for expenditure incurred in gaining superannuation premiums

  "70Q.(1) Section 116HA of the Principal Act is amended by adding at the end the following subsection:

  `(2) For the purposes of the application of this section to assessments in respect of income of the year of income in which 1 July 1988 occurred and to assessments in respect of income of any later year of income that is derived before the end of the 1989-90 year of income, if:

(a) a registered organization receives premiums (the "foreign premiums") in respect of a superannuation policy issued by it in the course of a business carried on by it at or through a permanent establishment of the organization in a foreign country; and

(b) the organization's assessable income does not include the income from the investment of the foreign premiums;

then the reference in subsection (1) to superannuation premiums does not include a reference to the foreign premiums.'.

  "(2) Section 116HA of the Principal Act is amended by adding at the end the following subsection:

  `(3) For the purposes of the application of this section to assessments in respect of income of the 1990-91 year of income or to assessments in respect of income of any later year of income, the reference in subsection (1) to superannuation premiums does not include a reference to premiums that are exempt from tax under section 23AH.'.

  "(3) Section 116HA of the Principal Act is amended by adding at the end the following subsection:

  `(4) This section does not apply to premiums received on or after 1 January 1994.'.

Repeal of sections 116HA and 116HAA

  "70R. Sections 116HA and 116HAA of the Principal Act are repealed.

Insertion of new sections

  "70S. Before section 116HB of the Principal Act the following sections are inserted:

Deductions to be allowable for expenditure incurred in obtaining superannuation premiums

  `116HAB.(1) Subject to this section, the expenses mentioned in subsection (2) that are incurred by a registered organization in the year of income in connection with the obtaining of superannuation premiums are allowable deductions.

  `(2) The expenses to which subsection (1) applies are:

(a)salaries, wages, bonuses, commissions, allowances, or similar benefits, in respect of the sale, renewal or continuation of superannuation policies; and

(b)expenditure in recruiting or training people in the selling of superannuation policies; and

(c) salaries, wages, allowances or similar benefits paid or payable to employees of the organization to the extent to which the benefits relate to the provision of administrative, technical or other assistance or support to people who sell superannuation policies; and

(d) expenditure in developing, or engaging in research in connection with, superannuation policies; and

(e) any other losses or outgoings to the extent to which they are incurred in preparing, selling or issuing superannuation policies or collecting superannuation premiums; and

(f) expenses in the general management of the organization's business to the extent to which the expenses are incurred in gaining or producing superannuation premiums.

  `(3) If:

(a)a provision of this Act (other than this section or section 51, 116H or 116HAC) allows a deduction from a taxpayer's assessable income in respect of a loss, outgoing or expenditure; and

(b) the provision extends to a taxpayer that is a registered organization;

the provision has effect in determining the deductions allowable to a registered organization as if any reference in the provision to assessable income included a reference to superannuation premiums.

  `(4) Expenses incurred by a registered organization (other than expenses in respect of which a deduction is allowable because of subsection (3)) that are of a capital nature are not allowable deductions under this section.

  `(5) If, assuming that:

(a) the Taxation Laws Amendment Act (No. 4) 1993 had not been enacted; and

(b) this Act provided that a registered organization's assessable income included the superannuation premiums received by the organization;

a deduction would not have been allowed to a registered organization in respect of a loss, outgoing or expenditure or a part of a loss, outgoing or expenditure, then, a deduction is not allowable to the organization in respect of the loss, outgoing or expenditure or the part of the loss, outgoing or expenditure, as the case may be, under this section or under another provision of this Act as it has effect because of this section.

  `(6) A reference in this section to a deduction in respect of a loss, outgoing or expenditure includes a reference to a deduction based on, or calculated by reference to, all or a portion of the loss, outgoing or expenditure.

  `(7) In this section:

"superannuation premiums" do not include premiums that are exempt from tax under section 23AH.

  `(8) This section applies to expenses incurred, or to deductions in respect of a loss, outgoing or expenditure incurred, on or after 1 January 1994.

Deductions to be allowable for expenditure incurred in obtaining the investment component of certain premiums

  `116HAC.(1) In this section:

"authorised actuary", in relation to a registered organization, means a Fellow or an Accredited Member of the Institute of Actuaries of Australia;

"relevant life assurance premiums" means premiums received in respect of life assurance policies other than:

(a) superannuation premiums; or

(b) premiums received in respect of eligible policies; or

(c) specified roll-over amounts; or

(d) premiums exempt from tax under section 23AH;

"relevant life assurance policy" means a life assurance policy in respect of which premiums received are relevant life assurance premiums.

  `(2) Subject to this section, the expenses mentioned in subsection (3) incurred by a registered organization in the year of income in connection with the obtaining of relevant life assurance premiums, to the extent to which the expenses relate to the investment component of those premiums, are allowable deductions.

  `(3) The expenses to which subsection (2) applies are:

(a)salaries, wages, bonuses, commissions, allowances, or similar benefits, in respect of the sale, renewal or continuation of relevant life assurance policies; and

(b)expenditure in recruiting or training people in the selling of relevant life assurance policies; and

(c)salaries, wages, allowances or similar benefits paid or payable to employees of the organization to the extent to which the benefits relate to the provision of administrative, technical or other assistance or support to people who sell relevant life assurance policies; and

(d) expenditure in developing, or engaging in research in connection with, relevant life assurance policies; and

(e) any other losses or outgoings to the extent to which they are incurred in preparing, selling or issuing relevant life assurance policies or collecting relevant life assurance premiums; and

(f)expenses in the general management of the organization's business to the extent to which the expenses are incurred in gaining or producing relevant life assurance premiums.

  `(4) If:

(a)a provision of this Act (other than this section or section 51, 116H or 116HAB) allows a deduction from a taxpayer's assessable income in respect of a loss, outgoing or expenditure; and

(b) the provision extends to a taxpayer that is a registered organization;

the provision has effect in determining the deductions allowable to a registered organization as if any reference in the provision to assessable income included a reference to the investment component of relevant life assurance premiums.

  `(5) Expenses incurred by a registered organization (other than expenses in respect of which a deduction is allowable because of subsection (4)) that are of a capital nature are not allowable deductions under this section.

  `(6) If, assuming that:

(a)the Taxation Laws Amendment Act (No. 4) 1993 had not been enacted; and

(b)this Act provided that a registered organization's assessable income included the investment component of relevant life assurance premiums received by the organization;

a deduction would not have been allowed to a registered organization in respect of a loss, outgoing or expenditure or a part of a loss, outgoing or expenditure, then, a deduction is not allowable to the organization in respect of the loss, outgoing or expenditure or the part of the loss, outgoing or expenditure, as the case may be, under this section or under another provision of this Act as it has effect because of this section.

  `(7) This section does not apply to premiums derived by a registered organization in a year of income unless the organization obtains a certificate by an authorised actuary, in the approved form, with respect to the operation of this section, before the date of lodgment of the return of income of the organization of the year of income or within such further time as the Commissioner allows.

  `(8) A reference in this section to a deduction in respect of a loss, outgoing or expenditure includes a reference to a deduction based on, or calculated by reference to, all or a portion of the loss, outgoing or expenditure.

  `(9) This section applies to expenses incurred, or to deductions in respect of a loss, outgoing or expenditure incurred, on or after 1 July 1994.

Deductions not allowable for benefits or reinsurance premiums

  `116HAD.(1) Despite any other provision of this Act, a deduction is not allowable to a registered organization in respect of:

(a) a benefit paid or payable under a life assurance policy; or

(b) the inclusion of an amount in the organization's reserves for the purpose of meeting any future liability (including a contingent liability) of the organization to pay benefits to which paragraph (a) would apply; or

(c) a premium paid or payable by the organization in respect of the reinsurance of the whole or any part of a life assurance policy; or

(d) an amount paid or payable to, or to an associate of, the holder of a life insurance policy in settlement of a dispute as to the liability of the organization under the policy.

  `(2) A reference in subsection (1) to a benefit paid or payable under a life assurance policy includes a reference to an amount paid or payable:

(a) in respect of a claim under the policy; or

(b)as consideration for, in connection with, or as a consequence of, the surrender, cancellation, forfeiture, termination or disposal of the policy or any rights under the policy; or

(c) in respect of a bonus under the policy; or

(d) in respect of an annuity under the policy; or

(e) that is a refund, or is in the nature of a refund, of a premium that is not included in the organization's assessable income.

  `(3) To remove any doubt, it is declared that a supplementary benefit (known as a rider benefit) that is paid or payable in respect of a non-life assurance risk (including an accident and disability risk, a sickness risk and a trauma risk) and in respect of which the premiums received by the registered organization that issued the relevant life assurance policy are included in the organization's assessable income is not a benefit paid or payable under a life assurance policy for the purposes of subsection (1).

  `(4) If a registered organization makes a late payment in respect of an amount that the organization is liable to pay under, or in relation to, a life assurance policy, any interest paid or payable by the organization because of the late payment is not a benefit paid or payable under the policy for the purposes of subsection (1).

  `(5) In this section:

"associate" has the same meaning as in subsection 26AAB(14).

  `(6) This section applies to assessments in respect of income of the year of income in which 1 July 1988 occurred and to assessments in respect of income of all later years of income.'.

Period allowed for furnishing amended returns without incurring penalty

  "70T.(1) If:

(a)a taxpayer furnished a return of income before the commencement of this section; and

(b)the return included a claim for a deduction under Division 8 or 8A of the Principal Act; and

(c)when the return was made it was reasonably arguable that the deduction was allowable under that Division; and

(d)that deduction is taken by the Principal Act as amended by this Division not to have been allowable; and

(e)within 6 months (or such further period as the Commissioner allows) after the day on which this Act received the Royal Assent the taxpayer furnishes an amended return that does not include a claim for the deduction;

no penalty is payable by the taxpayer because of the claim for the deduction but the Income Tax (Interest on Underpayments) Act 1986 applies in respect of any underpayment of tax as a result of any increase in tax that is payable because the deduction is not allowable.

  "(2) The question whether a matter was reasonably arguable as mentioned in paragraph (1)(c) is to be determined in the same way as the question would be determined under section 222C of the Income Tax Assessment Act 1936 if that section were applicable.".

  At end of bill, page 40, add the following Part:

"PART 5—AMENDMENT OF THE TAXATION LAWS AMENDMENT (SUPERANNUATION) ACT 1989

Principal Act

  "92. In this Part, `Principal Act' means the Taxation Laws Amendment (Superannuation) Act 1989.

Object of Part

  "93. This Part makes an amendment that is consequential on the amendments made by Division 10A of Part 3.

Amendment of section 17 of the Principal Act

  "94.(1) Section 17 of the Principal Act is amended by omitting subsection (2) of the section 112 that was inserted in the Income Tax Assessment Act 1936 by section 17 of the Principal Act and substituting the following subsection:

  `(2) This section does not apply to superannuation premiums to which section 111A applies.'.

  "(2) To remove any doubt, it is declared that, for all purposes (including the purposes of section 65 of the Taxation Laws Amendment (Superannuation) Act 1989), the section that was inserted in the Income Tax Assessment Act 1936 by section 17 of the Principal Act is taken to have been that section as amended by subsection (1) of this section.

  "(3) This section does not affect the operation of paragraph 12(b) of the Taxation Laws Amendment Act (No. 5) 1989 and, to remove any doubt, it is declared that the subsection 112(2) of the Income Tax Assessment Act 1936 that was omitted by that paragraph is taken to have been that subsection as amended by subsection (1) of this section.".

  Remainder of bill agreed to.

  Bill reported with amendments and requests.