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Is the non resident proportion of foreign establishment amounts derived by a life insurance company which is exempt from tax under paragraph 320-35(1)(d) of the Income Tax Assessment Act 1997 (ITAA 1997) excluded exempt income for the purposes of subsection 36-20(3) of the ITAA 1997?

No, the non resident proportion of foreign establishment amounts derived by a life insurance company which is exempt from tax under paragraph 320-35(1)(d) of the ITAA 1997 is not excluded exempt income for the purposes of subsection 36-20(3) of the ITAA 1997.

An Australian/overseas fund or an overseas fund established by a life insurance company derives foreign establishment amounts. The non resident proportion of these amounts received by a life insurance company is exempt from income tax under paragraph 320-35(1)(d) of the ITAA 1997.

Subsection 36-20(3) of the ITAA 1997 includes in excluded exempt income amounts of exempt income to which specific provisions of the Income Tax Assessment Act 1936 (ITAA 1936) apply. Subsection 36-20(3) of the ITAA 1997 does not list exempt income under paragraph 320-35(1)(d) of the ITAA 1997 as excluded exempt income. ( Note: this issue has been referred to Government)