Issue
Are the benefits received by resident taxpayer from a foreign life assurance policy (FLP), which the taxpayer does not have an interest in, included in assessable income under section 529 of the Income Tax Assessment Act 1936 (ITAA 1936)?
Decision
No. The benefits received by a resident taxpayer from a FLP which the taxpayer does not have an interest in, are not included in assessable income under section 529 of the ITAA 1936.
Facts
The taxpayer is an Australian resident for income tax purposes.
A relative, who was a non-resident of Australia, passed away and the taxpayer received a monetary benefit from the life assurance policy of the deceased relative.
Under the revenue laws of the foreign country in which the life assurance policy was written, any tax liability on the termination of the life assurance policy will be that of the deceased relative.
Reasons for Decision
Section 529 of the ITAA 1936 provides that the assessable income of an Australian resident taxpayer includes foreign investment fund income that accrues to a taxpayer who has an interest in a FLP.
Subsection 483(3) of the ITAA 1936 provides that a person has an interest in a FLP if the person has legal title to the policy.
The taxpayer did not have an interest in the deceased relative's life assurance policy as the deceased relative was the insured under the policy and therefore had legal title.
Accordingly, the benefits the taxpayer received from the FLP are not included in assessable income under section 529 of the ITAA 1936.