Insurance - PricewaterhouseCoopers

2.8
Life insurance taxation
General developments
The Government has embarked on an ambitious plan for significant tax reform. A
comprehensive review of Australia’s tax system is currently under way under the
Henry Tax Review with the first paper issued on 6 August 2008 which highlights
some of the complexities of the current system. Other key tax developments during
the year include:
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The Board of Taxation have issued reports on Managed Investments Trusts and
the Anti-tax deferral regimes. Recommendations from those reports are yet to be
made to the Government.
The new Taxation of Financial Arrangements (TOFA) legislation has been
introduced which broadly determines the way gains/losses on financial
arrangements are brought to account for tax purposes. For June balancing
companies these rules apply from 1 July 2009 by election or otherwise from
1 July 2010.
The Government announced on 2 March 2009 that they intend to regulate life
insurance groups in a consistent manner to general insurance groups. Assuming
that life insurance groups will be required to maintain certain minimum levels of
capital, this may have an impact on the thin capitalisation position of inbound and
outbound life insurance groups.
In addition, the Government issued a mandate to the Board of Taxation to undertake
a review of some elements of the Goods and Services Tax (GST) regime. Various
industry bodies lodged submissions including the Insurance Council of Australia (ICA)
and the Investment and Financial Services Association (IFSA). The Board was due to
report its findings to the Government by 31 December, 2008. At the time of printing
the Government had not publically released the Board’s report or their response.
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Life
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