Issue
Does a friendly society issue any life insurance policies which provide for participating benefits as defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
No, a friendly society does not issue any life insurance policies which provide for participating benefits as defined in subsection 995-1(1) of the ITAA 1997.
Facts
A friendly society issues ordinary bundled endowment policies.
Reasons for Decision
A friendly society issues a life insurance policy which provides a participating benefit if the definition of a participating benefit in subsection 995-1(1) of the ITAA is satisfied..
Subsection 995-1(1) of the ITAA 1997 defines participating benefit as having the same meaning as that given by section 15 of the Life Insurance Act 1995 (the Life Insurance Act).
Policies issued by friendly societies are not participating policies. Regulation 2.01A of the Life Insurance Regulations 1995 (the Regulations) modifies the application of the Life Insurance Act to friendly societies. Item 1 of Schedule 5 of the Regulations omits section 15 of the Life Insurance Act for the purposes of applying that Act to friendly societies. Therefore, policies issued by friendly societies do not provide participating benefits as defined in subsection 995-1(1) of the ITAA 1997.